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Women’s Financial Security is Still Unequally Controlled

How women can better prepare to be financially independent until the laws become equalized.

By Marcia Mantell, RMA

Americans pride themselves as a democracy and a nation of laws, not of men nor king nor czar. And, in general, our laws make for the strongest democracy in the world.

Marcia Mantell, RMA®, is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women,” and blogs at

Marcia Mantell

However, not all laws protect and serve all citizens in the same way. Even today, unfavorable laws knowingly put women on unequal footing when it comes to money and asset transfers.

Where Were You When…

It wasn’t until 1920 that every woman across the US had a say in deciding who would represent her and who would support her position when drafting the laws of the land.

While that was the most important step to having a fair say, it has taken all 102 years since the passage of the 19th Amendment to win other rights. Gaining full equality is a slow and arduous journey.

Think about your own financial equality. How old were you or your mother or your grandmother when women finally gained these areas of control:

  • 1966: It was illegal for women to run in the Boston Marathon.
  • 1974: Up until a 1974 law, women were unable to open their own credit cards.
  • 1978: The Pregnancy Discrimination Act of 1978 finally ended the practice of firing women when they got pregnant.
  • 1981: The last year husbands could unilaterally take out second mortgages, assume this debt, then leave their wives to deal with it when they died or during divorce proceedings.
  • 1997: The first year an at-home mom could save as much in her own IRA as her working husband.
  • 1998: First ever women’s hockey at the Olympics.

Financial Laws That Need To Go

Today, there are two areas of the law that are especially effective at penalizing women: 401(k) rollovers and divorce laws. Lawmakers know the current laws harm women in particular yet have dragged their heels to enact lawful remedies for decades. Women and men need to fully understand how these laws work so they can make better, smarter, fairer actions at home to protect each other.

Making Incremental Law Changes in 401(k)s for Women

A recent Congressional proposal, RISE and SHINE (Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act of 2022), enjoys bipartisan support. In this proposal are two sections to specifically address women’s issues:

  • recommended improvements to retirement plans, and
  • enhanced retirement security for part-time workers.

First, a section requiring more disclosure about moving 401(k) dollars out of an employer plan. Employers would be required to provide more information about taking a lump sum from a 401(k) plan versus keeping money in-plan with required spousal protections. It is a small step forward, and more must be done to protect a wife’s retirement income security. But at least Congress is recognizing the unfairness and the lack of protection for wives under current law.

Another provision included will help more women who work part-time gain access to retirement plans. Instead of waiting three years to participate in an employer’s 401(k), part-time workers, who are typically women, would get access to save after two years. Again, this is still too long to wait to save, but it’s a step in the right direction.

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How Lump-Sum Rollovers Hurt Wives

In the majority of traditional married couples today, the husband is still the primary or higher wage earner. He’s saved significant amounts in his 401(k). His wife, the lower earner, has saved less in a retirement plan or has no personal savings.

When he leaves a job or retires, he’s the only spouse who decides whether to leave 401(k) money in the plan or roll it to an IRA. If he leaves money in the plan, she has important protections, especially if he dies first.

  • She is entitled to at least 50% of the balance for her years living in retirement.
  • She must agree to any changes in beneficiaries, and sign that she is waiving her rights.

In many cases, the wife is named the sole, primary beneficiary of the 401(k) and would receive 100% of the account if she is widowed. But it doesn’t have to stay that way in an IRA.

If he chooses to take the lump sum and roll it to an IRA, she loses all rights to that money. It is now totally and completely in her husband’s control to invest it, spend it, or do nothing with it regardless of what she may need or want. Furthermore, he is in total control to name the beneficiary—and it does not have to be his wife.

Wives have no idea this is their financial situation. Frankly, husbands don’t realize they have put their wives at such a financial disadvantage either. But current laws allow this exact situation.

Understanding Financial Rules in a Divorce 

Women are often at a greater disadvantage when it comes to divvying up marital assets in a divorce. And, current laws do little to help women protect their financial future.

Take the QDRO rules—Qualified Domestic Relations Order. This is a specific document issued by a court order separate from the divorce decree. It directs a plan sponsor to split a 401(k) between the participant and his now ex-wife.

During a divorce, a specified amount will be awarded to each ex-spouse by way of the divorce decree. However, women and many lawyers fail to understand the information contained in the divorce decree does not provide the directions to split qualified retirement accounts—401(k)s, 403(b)s, 457s, and defined pension plans.

An additional document is required to move money out of employer plans—the QDRO. Obtaining this document falls to the non-owner of the account. She must apply to a court to claim her share of the retirement assets. This step is not at all clear and causes undue harm for divorced women who thought the retirement assets were moving to an account for her.

Splitting Other Assets

There are more and different processes for physically moving money into the ex-wife’s new, individual accounts. And she must be responsible for dotting every “I” and crossing every “T."

  • When an ex-wife has been awarded a portion of her ex’s IRA, she needs to handle the request specifically as a “transfer of account incident to divorce” to avoid taxes on the transfer. A copy of the divorce decree is generally required along with this specific instruction.
  • A joint brokerage or investment account is split and the assets are transferred by way of a letter of instruction. Once the valuation of assets is determined, both ex-spouses set up a new individual investment account. Each should send a letter of instruction to the financial institution specifying details of which assets will transfer into each of the individual accounts.

How Women Can Better Prepare – Until The Laws Are Fair and Equitable

Splitting up a marital household can be incredibly challenging. Determining the valuation of the assets acquired during the marriage, understanding the complex tax rules that accompany each different type of asset; both in the near-term and decades later, and knowing the exact process required by law to get your fair share is no easy process. It’s critical to find the right experts (lawyers, financial planners, divorce planners, etc.) to be on your side. Shop around and demand expertise for your situation.

Realizing that you lose all interest in 401(k) assets once they roll to an IRA is the starting point. Couples can put protections in place despite the unfair situation with current laws. For more information and ideas on how to work around this very real situation, read a more complete article on Retirement Daily.

About the Author: Marcia Mantell, RMA®

Marcia Mantell is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women” and blogs at

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