New Retirement Bill Stops Spouses From Emptying 401(k)s

New legislation, the Women’s Retirement Protection Act of 2023, would ensure that a spouse cannot empty a shared retirement savings account without their partner’s consent.

While the wording of the bill, introduced on Aug. 8 by Rep. Lauren Underwood, D-Ill. and Sen. Tammy Baldwin, D-Wis., is gender neutral, it is intended to “address economic inequalities and help women achieve financial security and independence,” Underwood said.

Underwood was seeking co-sponsors for the bill last year.

In the House, the legislation is co-led by Reps. Jan Schakowsky, D-lll.; Suzanne Bonamici, D-Ore.; and Donald Norcross, D-N.J.

In the 117th Congress, a provision from the Women’s Retirement Protection Act of 2021 was signed into law, expanding retirement plan eligibility for part-time workers, most of whom are women, the lawmakers explained.

For many working families, their 401(k) plan, the lawmakers said in a statement, “is often their largest asset aside from their home.”

Under current law, one spouse could take a distribution or a loan from the plan without the other spouse’s knowledge or consent, the lawmakers said.

The legislation would set up spousal protections, similar to those that are available for defined benefit plans, for defined contribution plans like a 401(k).

It also seeks to increase financial literacy “by providing grants for community-based organizations to help provide information and financial tools to women who are of working or retirement age.”

Grants for community-based organizations would also be made available for women with low incomes and survivors of domestic abuse to help them qualify for domestic relations orders, as well as ensure they receive retirement benefits they are entitled to following a divorce or legal separation.

“Every American who has put in a lifetime of hard work deserves the dignity of a stable retirement,” Baldwin said in a statement.

“Yet, that secure retirement is out of reach for too many women because of the systematic roadblocks like unequal pay, and time taken off work because caregiving responsibilities fall disproportionately on women,” Baldwin continued. “I’m proud to fight for families and women to ensure they have the resources and tools they need to retire with peace of mind and stability.”

According to the lawmakers, women “lag significantly” behind their male counterparts in retirement savings—in 2022, their median retirement income was 83% of men’s retirement income.”

The WRPA is endorsed by the National Women’s Law Center, Pension Rights Center, AARP and the National Committee to Preserve Social Security & Medicare.