Proposed Bill Mandates Spousal Consent for 401(k) Withdrawals, Funds Financial Aid for Women

This legislation, the Women's Retirement Protection Act, aims to tackle the documented retirement savings gap faced by women. It introduces new rules for accessing funds in common retirement accounts like 401(k)s and sets up grant programs designed to boost financial know-how and legal support, particularly for vulnerable women.

Your Partner Might Need to Sign Off: Spousal Consent Comes to Retirement Accounts

The biggest shift here involves spousal consent for defined contribution plans – think 401(k)s, 403(b)s, and similar accounts. Section 3 of the bill generally requires a participant's spouse to provide written, notarized consent before most distributions or withdrawals can be made. The idea is to prevent one spouse from emptying a retirement account without the other's knowledge, mirroring protections already common in traditional pension plans.

There are exceptions, though. Consent wouldn't be needed for things like mandatory minimum distributions required by law, distributions automatically rolled over to the spouse's own IRA, certain types of annuity payments, or if the withdrawal is less than 25% of the account balance (a one-time exception per account). These rules kick in for plan years starting one year after the Act becomes law (Section 4).

Getting Savvy and Getting Help: New Grants and Info Access

Beyond account rules, the Act pushes for better financial literacy and support:

• Financial Education Boost: Section 6 authorizes $100 million per year (starting fiscal year 2026) for grants to community organizations. These groups would use the funds (minimum grant: $250,000) to provide financial literacy education, outreach, and counseling specifically targeting women's retirement planning needs.
• Help with Divorce Settlements: Section 7 sets aside another $100 million annually (starting fiscal year 2026) for grants (minimum $250,000) to help low-income women and survivors of domestic violence navigate the legal process of obtaining Qualified Domestic Relations Orders (QDROs). QDROs are crucial court orders needed to divide retirement assets correctly during a divorce.
• Easier Access to Info: Section 5 requires financial service providers offering retirement products to include a clear link to consumer education resources on the Consumer Financial Protection Bureau (CFPB) website, making it simpler to find unbiased information.

Essentially, this bill tries to address women's retirement security on multiple fronts: adding safeguards to shared assets, funding educational programs, and providing legal assistance for dividing assets during divorce.