Private Pensions

IRS Efforts Underway to Improve Spousal Consent Forms Gao ID: HRD-92-31 December 20, 1991

In 1989 GAO reported on the need for informative and understandable spousal consent forms for private pension plans. Since then, the Internal Revenue Service (IRS) has published two pamphlets to inform spouses about survivor benefits but has neither required employers to include the information GAO recommended on spousal consent forms nor developed non-technical-language examples. In December 1991, however, IRS began work on regulations that would require forms to contain the needed information--including the survivor benefit's estimated dollar amount and the consequences of waiving the benefit. IRS has also started to develop language examples. In GAO's view, consent forms should also state (1) that the spouse's decision to waive survivor benefits is voluntary and (2) whether a spouse has the right to revoke an earlier decision. This information would further help spouses make well-informed decisions about survivor benefits. IRS has agreed to consider requiring this information on consent forms in its regulations.

GAO found that: (1) although IRS developed two information booklets to inform spouses about survivors benefits, there was no assurance that spouses would be informed of their rights under the Retirement Equity Act, since individuals must obtain the booklets themselves and IRS did not require employers to include pertinent information on spousal consent forms or develop nontechnical language examples; and (2) IRS has initiated two projects aimed at developing language examples and changing its regulations to require employers to include such information as the survivor benefit's estimated dollar amount and the consequences of waiving the benefit on spousal consent forms. GAO believes that, to further assist spouses in making informed survivor benefit decisions, the consent forms should also disclose: (1) that a spouse's decision to waive the survivor benefit is voluntary; and (2) whether a spouse has a right to revoke an earlier decision to waive the annuity.

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