When Does a Nonemployee Spouse Have a Right to the Employee's Retirement Accumulation?

In the first part of this article (The Matrimonial Strategist, December 2009), I outlined the statutory spousal protection provisions that apply to employee pension and profit-sharing plans governed by ERISA. For defined benefit pension plans and money purchase defined contribution plans, the participant's spouse has the right to: 1) a survivor benefit if the participant dies before retirement (the QPSA); and 2) a survivor annuity in the required default benefit at retirement (the QJSA). These benefits may be “waived” by the participant, that is, the participant may elect a different type of benefit (for example, distribution in a lump sum) or to designate a different beneficiary, but only with the written consent of his or her spouse that conforms to certain statutory requirements. Profit-sharing plans, including 401(k) plans, are not subject to the spousal protection rules, provided the spouse has the right to the death benefit under these plans, nor are rollover IRAs governed by these rules. Benefit distributions from these plans are typically made solely to the participant who may then do whatever s/he wants with the distributed funds. While these rules are intended to protect the wives or husbands of workers, they may have unexpected effects when the worker's marital status changes.