Removal of Spousal Consent

[Guest Julie]

Our plan has always required spousal consent on loans and any type of withdrawals. We've been told that it's virtually impossible to remove a spousal consent requirement from the plan, although we can remove it going forward, but we would still have to require spousal consent on the "old" money. Is this really the case?

[John Feldt ERPA CPC QPA]

Does your plan contain participants with account balances that were required to be subject to the QJSA requirements, such as a money purchase plan account?

Back in 2002, or thereabouts, a lot of money purchase plans were merged into 401(k) plans or profit sharing plans because of the change in the deduction limits. So, if a money purchase plan was merged into this plan, then at least those accounts are still subject to the spousal consent requirements. You could remove the spousal consent requirements from the rest of the plan. There might be something else to consider, like whether or not the plan defaults 100% of the account to the spouse or just 50% - but let's see what others might say from this board about that.

[Guest Julie]

No, our plan (as far as I know) never had QJSA provisions in it. For some reason, we added the spousal consent after the REA. And, there was no money purchase plan involved.

[austin3515]

As long as you meet certain notice requirements to participants you can get rid of the j&s requirements in your plan. Based on what you've told us, you're getting incorrect advice.