Couples, Retirement Accounts, and Financial Infidelity

Takeaways

• Most 401(k)-type plans generally don’t require spousal consent for withdrawals, which can leave a spouse exposed during the account owner’s lifetime.
• Spousal protections vary widely by account type, with traditional pensions generally offering more safeguards than 401(k)s and many individual retirement accounts (IRAs).
• Couples can reduce risk now through planning, including regular joint account checkups, beneficiary reviews, and careful rollover decisions.

Is your spouse keeping financial secrets behind your back by removing funds from retirement accounts without your knowledge or approval? It may be possible, according to a new report from the Government Accountability Office (GAO), a nonpartisan congressional watchdog.

Financial infidelity is often associated with secret credit cards, hidden debt, or undisclosed spending. But it can also involve one of a couple’s most important long-term assets: retirement savings.

Unlike beneficiary changes, which often require spousal consent in most defined contribution plans, few 401(k)-type plans require a married account owner to obtain spousal consent before removing funds.

The report’s main takeaway is right in the title: “Most Defined Contribution Plans Do Not Require Spousal Consent to Remove Funds and Doing So Would Involve Trade-offs.”

While those trade-offs include higher administrative costs and longer withdrawal times, the current system can leave spouses financially exposed.

Financial infidelity may be framed as a marital or budgeting problem, but it can also turn into an estate planning problem when spouses don’t know:

• what accounts exist,
• whose name the account is in,
• who controls them, or
• whether beneficiary designations match the family’s actual plan

The Spousal Consent Divide: 401(k)s vs. Traditional Pensions

Married Americans may assume that because marital assets are viewed as joint property in a divorce, they are equally protected during the marriage. But with employer-sponsored accounts, where many couples accumulate a large share of their retirement wealth, federal laws do not treat spousal consent the same way.

Traditional pensions, also known as defined benefit plans, are designed to provide lifetime income and survivor benefits. As a result, they have long included stronger protections for spouses under federal law. In those plans, a spouse may have rights that cannot be waived without documented consent.

Federal law does not offer the same level of protection for most private defined contribution plans, such as 401(k)s and 403(b)s. In these plans, the account is tied to the employee’s individual balance rather than a promised pension payment. And federal law provides almost zero spousal protections for individual retirement accounts (IRAs).

• Traditional pensions: Protect you both during life (withdrawals) and at death (beneficiaries)
• Workplace 401(k)s: Protect you only at death (beneficiaries), not during life (withdrawals)
• IRAs: Often have fewer automatic spousal protections (rules vary by state)

For most defined contribution plans, changing a beneficiary requires spousal consent. GAO found, however, that few plans require consent before the account owner takes money out through a loan, withdrawal, or distribution.

That means a spouse may be protected from being removed as beneficiary (i.e. when their spouse dies), but not from seeing the account reduced during their lifetime.

The Fallout From Hidden Retirement Withdrawals

Many plans are optimized for administrative speed, allowing single-signature transactions to process in just two to three days. Although efficient for the individual account holder, this system can make it relatively easy for a partner to deplete a retirement account without ever triggering an automated warning to the other spouse who may be affected.

The GAO report does not suggest that secret retirement withdrawals happen in every marriage, or even in most marriages. But it does expose a divide that can have serious consequences when trust breaks down.

• Fund removal is not rare, but secrecy is harder to measure. GAO found that among married households where at least one spouse had a 401(k)-type account, about one in 10 removed funds in 2021. However, GAO also noted that no data show how frequently those removals occurred without a spouse’s knowledge.
• The harm can be severe. Stakeholders interviewed by GAO reported cases involving marital conflict, funds that could not be recovered, and losses of hundreds of thousands of dollars.
• Timing matters. The closer a spouse is to retirement, the less time they may have to rebuild savings after discovering that money has been removed.
• Some spouses are more exposed than others. GAO noted that women may be more vulnerable because they are less likely to have their own retirement accounts and are more likely to have reduced earnings due to part-time work or caregiving.
• More protection comes with trade-offs. Requiring spousal consent for more defined contribution plan transactions could protect some spouses, but GAO concluded that it could also increase administrative costs, delay processing, and require exceptions in sensitive situations such as domestic violence.

For couples who rely on joint retirement savings, the GAO report’s lessons point more toward caution than accusation.

Not every retirement account transaction should be treated with suspicion. But retirement savings should also not be treated as invisible money controlled by only one spouse.

If an account is part of a couple’s shared future, both spouses need a clear understanding of what it holds, who controls it, how it can be accessed, and how it fits into their financial and estate plans.

How to Secure a Shared Future: Financial Infidelity and Estate Planning

While the federal government cannot track what happens behind closed doors, consumer data shows that financial secrecy is a widespread marital reality.

Research from Bankrate reveals that more than 40 percent of U.S. adults in committed relationships admit to keeping a financial secret from their current spouse or partner, with 23 percent actively harboring secret debt, 19 percent having a secret savings account, and 18 percent holding a secret credit card.

Among younger adults, the numbers trend even higher: 54 percent of Millennials and 67 percent of Gen Z admit to some form of financial secrecy. At the same time, younger Americans are increasingly using IRAs—particularly Roth IRAs—for retirement savings amid record-high IRA ownership and assets.

Although rare, there are even instances of spouses keeping “secret estate plans,” such as a secret trust, from their partner.

Like many government reports, the GAO study stopped short of specific policy prescriptions or an action plan for lawmakers. Families, however, do not have to wait for Congress or plan administrators to act. Estate planning can create actionable checkpoints aimed at reducing secrecy, confirming account information, and keeping a couple on the same financial page:

• Conduct a joint retirement audit. Treat retirement tracking like an annual tax return. Once a year, review all active retirement accounts together, including current balances, outstanding loans, recent withdrawals, and distribution history.
• Coordinate beneficiary designations. Retirement accounts usually pass outside a will or trust. Review primary and backup beneficiaries to confirm that the account forms match the estate plan.
• Consider a postnuptial agreement. If caregiving, career pauses, or unequal earnings create a major retirement savings imbalance, a postnuptial agreement can spell out how other marital assets should be handled if retirement savings are depleted.
• Watch the IRA rollover trap. Moving funds from a workplace 401(k) to an IRA can change or reduce the federal spousal protections attached to the account. Before rolling over substantial retirement savings, spouses should understand how the move affects beneficiary rights, access, and the overall estate plan.

Trust, Transparency, and Retirement Savings

Most couples would rather keep the government out of their finances, and the GAO report should be recognized for what it is: an examination of federal laws and regulations that analyzes current policies and potential alternatives—not an overreaching position paper or cautionary tale.

But with financial infidelity taking many forms and surfacing in many households, building extra retirement-account transparency into an estate plan can be a prudent trade-off for added peace of mind.