Private Pensions: Spousal Consent Forms Hard to Read and Lack Important Information
HRD-90-20
Published: Dec 27, 1989. Publicly Released: Dec 27, 1989.
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Highlights
Pursuant to a legislative requirement, GAO examined the content and readability of certain government-required pension documents, focusing on whether the: (1) consent forms that spouses must sign explain survivor benefits and the consequences of not selecting them; and (2) forms present the information in a way that most people can understand.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should issue guidance on the content of spousal consent forms. |
In accordance with the requirements of P.L. 104-188, the Small Business Job Protection Act of 1996, signed by the President on August 20, 1996, IRS issued sample language on the content of spousal consent forms on January 13, 1997 in IRS Notice 97-10, 1997-2 D.B. 41.
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| Internal Revenue Service | The Internal Revenue Service (IRS) should require employers to provide consent forms that explain in nontechnical language the terms of the J&S annuity, as well as other payment options, and the consequences of not selecting the annuity. This includes: (1) stating the spouse's monthly survivor benefit as a percentage of the retiree's monthly amount; (2) explaining that the retired worker's monthly annuity will be less if the J&S annuity is selected instead of the single-life annuity; (3) clearly communicating the consequences of rejecting the J&S annuity; and (4) communicating the relative financial effect on a worker's pension benefit if the J&S annuity is selected. | The sample language in IRS Notice 97-10 incorporates the recommendations by: (1) providing a space for the plan administrator to fill in the spouse's monthly survivor benefit; (2) explaining that other (non-qualified joint and survivor annuity) benefit payment forms may pay the retiree more during the retiree's life; (3) clearly stating in the forms for a waiver of the joint and survivor annuity that, if the spouse consents to the waiver and selects an alternate form of payment, the spouse may receive lower payments or no payments after the death of the retiree; and (4) containing language discussing the effect on the retiree's annuity if the plan charges for the qualified pre-retirement...
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| Internal Revenue Service | To help employers present this information in nontechnical language, IRS should develop model language for presenting information in the spousal consent form. IRS guidelines for these forms should consider issues of content, readability, and design. |
The sample language in IRS Notice 97-10 adopts GAO's recommendation that the communication be clear by using language that can be understood by as broad an audience as possible. A special computer program was used to test the readability of the sample language.
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Employee survivors benefitsFederal formsPensionsPrivate sectorRetirement benefitsTax lawWidowed personsWritten communicationPension planWorkers