If a recordkeeper asks for gender, what do they use it for?

I’ve seen some big recordkeepers ask for information on a participant’s or employee’s gender, with system fields and drop-downs for female, male, nonbinary, or unspecified.

An employment-based individual-account (defined-contribution) retirement plan often has no provision that determines a benefit according to the participant’s sex or gender.

Yet, I imagine a service provider has other service-related reasons for collecting the information.

What are a service provider’s uses for which it’s helpful to know whether a participant is female, male, or nonbinary?
 

From the standpoint of what a recordkeeper needs to know about a participant's gender for the recordkeeper to provide plan accounting services, they do not need to know.

From the standpoint of interacting with the participant in delivering notices, sending out plan-related correspondence, emailing or having conversations with a participant, acknowledging the participant's gender identity helps build a rapport with the participant.  Gender identity goes beyond the use of pronouns and includes things like Mr., Mrs., Miss, Ms. or Mx. as titles or honorifics typically intended to show respect for the individual.

Paul I, thank you for mentioning respectful oral and written communications, including getting honorifics right.

(BenefitsLink neighbors, if you’re wondering, for the last 14 years my university teaching includes how to use language that refers to personal information, including sex or gender, in respectful and thoughtful ways. But my students, all of whom have work experiences and some inside retirement service providers, seen unable to mention a use beyond the one Paul I describes.)

Is there another use for a record of whether a participant is female, male, or nonbinary?

While I typically try to avoid politics in retirement plan discussions - looking ahead, with the current Congress and administration, there might well be in the near future. However, I wouldn't dare to predict something like this - just take it as it comes, if it happens at all.

I’ve read some proposed, and some enacted, laws, Federal and State, on the on the two-sexes theme.

I’ve not yet read a law that forbids a nongovernmental service provider to ask about an individual’s voluntary description of sex or gender information.

While @Peter Gulia reasonably posits/considers that maintaining/collecting any gender information for a DC plan database may be superficial and/or unnecessary, I suggest it may be explained by inertia:  the gender data element is merely one of many items that were collected from the beginning of time.  It is important to collect gender ID is a defined benefit plan database if that database is used for actuarial valuations and/or determining actuarial equivalency in optional forms of annuity benefit.  

Consider a payroll/HR data collection: is it important for an employer to have a gender ID?  From a payroll perspective, maybe not; but that data collection was (and is) often used for other purposes, including passing data to providers of medical or life or disability insurance.  Hence, it is just one of many data elements of what many consider a "complete" database.

I have also seen such data be one of many clues when there is question about someone's identity.  Also, before the days of same-sex marriage, it might be a "flag" to question whether data supplied by a vendor (or plan sponsor) contains errors.  For example, suppose the data supplied contains a gender code of M for everyone, but is for a hospital known to have about 60%-80% female population; that anomaly should make you question not only the legitimacy of that data element but also ask about other data validity.  Don't laugh, I've seen it.

I don’t imagine collecting information about sex or gender is unnecessary or superficial. Rather, I sense service providers have practical uses for the information, and I seek to learn more about those uses.

david rigby, thank you for the inertia explanation.

Also, I know information about sex or gender can matter for a defined-benefit pension plan; that’s why my query assumed an employment-based individual-account (defined-contribution) retirement plan. And I know an employer might have many purposes for recording and using information about an employee’s sex or gender.

But my query is about what an individual-account retirement plan’s service provider does with gender information. Especially if the service provider never provides services regarding a defined-benefit pension plan.

It’s been almost 20 years since I worked inside a recordkeeper. Every day, I learn about recordkeepers’ offers of services and ways of working that didn’t exist 20 years ago. Sometimes, I learn directly from a recordkeeper. But sometimes I seek information that doesn’t depend on my work directly for a particular client.
 

1 hour ago, ratherbereading said:

Girls will be boys and boys will be girls
It's a mixed up, muddled up, shook up world...

The Kinks, 1970

Oh, Lola

Life expectancy needed by actuaries to compute survivor annuity benefits and to assure adherence that pursuant to ERISA joint and survivor annuity will be the “actuarial equivalent” of the single life annuity. ERISA §§ 205(d)(1)(B), (d)(2)(A)(ii), 29 U.S.C. §§ 1055(d)(1)(B), (d)(2)(A)(ii).  

Many individual-account retirement plans don’t allow an annuity as a form of distribution.

Of employment-based individual-account retirement plans that allow an annuity, the rates are not sex-distinct. Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (July 6, 1983).

Likewise, factors to determine other-than-an-annuity Internal Revenue Code § 401(a)(9) minimum-distribution amounts are not sex-distinct. See 26 C.F.R. § 1.401(a)(9)-9 (GPO eCFR as of Mar. 31, 2025), https://www.ecfr.gov/current/title-26/section-1.401(a)(9)-9.

For recordkeepers that have managed accounts, gender is a piece of information that is useful for the life expectancy to determine how long the assets need to be available in retirement.  While not a perfect fit, gender is also nice to have when someone calls into the call center and the name of the account is Nancy, but the voice sounds like Fred - that is a "flag" to watch for possible fraud.  I was also thinking about beneficiary forms, but that has more to do with the collection of Married or Single information.

R Griffith, thank you for the point about managed accounts.

On 4/1/2025 at 1:50 PM, CuseFan said:

Oh, Lola

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