Spousal Consent (again)

[Guest nancy814]

I am the TPA of a 401(k) Plan. Participant has requested an in-service distribution of rollover account. The plan allows for this.

The distribution forms for the plan have a place for spousal consent and the Plan Administrator routinely reqires spousal consent for any distributions/loans from the plan. Normal form of benefit is Lump Sum. The Plan Document says that if normal form of benefit is not a QJSA, "all distributions can be made from the Plan to a Participant without the consent of the Participant's Spouse".

The participant requesting the distribution does not want to get spousal consent. Can we require Spousal Consent on this distribution as that is what we have been doing all along for distributions? Would the plan be in trouble treating this distribution differently?

Thanks much for your help with this!

[Guest Sieve]

Seems to me that the Administrator (as per ERISA, not TPA) has the discretion as to whether or not consent will be required. If you always have required consent, then you can simply change going forward, but I wouldn't make a lone exception (it either could be disriminatory, if this is an HCE, or else others will find out about it and not like the special treatment afforded to one employee--and they will find out).

Why continue to require consent in the first place?

[Bird]

What's the basis for requiring spousal consent if the plan doesn't require it? (!)

[david rigby]

What's the basis for requiring spousal consent if the plan doesn't require it? (!)

What he said.

[K2retire]

I've heard of several TPA firms that routinely require it on balances over $5,000 so that their processing staff doesn't have to determine whether or not the plan (or part of the plan) is subject to QJSA rules each time the process a distribution.

[mbozek]

What's the basis for requiring spousal consent if the plan doesn't require it? (!)

What he said.

That makes no sense. The plan administator cannot add requirements that are not required in the plan because it would violate the settlor's intentions. Could a plan administrator remove an investment option expressly provided in the plan if there was no express authority or add additional requirements for eligiblity to participate in the plan? If the PA thinks that spousal consent is needed there is a simple solution: amend the plan.

[Guest nancy814]

Thanks all for the input and help. Looks like plan will be amended.