smart spending

Financial rules for stay-at-home spouses

family laying down front of house
  • If you want to keep your spending separate, you can't do it with your own card.
  • You may not earn a paycheck, but you can put money away for retirement.
  • If you divorce after your 10th anniversary, you'll have a richer retirement.

The "Mommy Wars" and related skirmishes have been waged for decades, with no distinct winners.

What is clear is that there are several important laws and financial rules for stay-at-home spouses. Enmeshed in complicated government regulations, many homemakers are not aware of how their no-paycheck status impacts what's in their wallet today and their future financial security.

"They just don't know their rights," says Amy Matsui, senior counsel with the National Women's Law Center.

Here are some of the financial rules for stay-at-home spouses, defined as someone working on the home front but not drawing a paycheck.

Getting a credit card

If you want to keep your personal spending separate, you can't do it with your own credit card. One of the consequences of the Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act, of 2009, which aimed to bar issuers from supplying college students with credit by requiring that cards be issued only to those with income to pay the bills, was to also restrict homemakers who don't earn income on their own from getting their own card.

One CARD Act provision that went into effect Oct. 1, 2011, made it impossible for nonworking spouses without their own source of income to get a new credit card. It meant that a homemaker could only get a card through his or her spouse as an authorized user on a joint card.

These financial rules for stay-at-home spouses sparked the ire of many like Holly McCall, who partnered with the nonprofit group MomsRising to petition for signatures on its website and on to ask the federal Consumer Financial Protection Bureau to amend the law for nonearning homemakers.

In October 2012, the CFPB proposed changes to the new regulations to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. The bureau's proposed revision would allow credit card applicants who are age 21 or older to rely on third-party income to which they have a reasonable expectation of access.

Protecting 401(k) funds

You rely on these retirement funds coming from your working spouse, but you could get a nasty surprise. A 401(k) account is often the biggest asset that couples have. To protect that important source of retirement savings, federal law requires a worker to get his or her spouse's signature if he or she wants to name someone else as the beneficiary of the account.

But if someone with a 401(k) changes jobs, that person can cash out the 401(k) without getting a spouse's permission. The person also can roll the funds into an individual retirement account and name someone else as the beneficiary, Matsui says.

"IRAs are a huge problem," she says. When someone sets up an IRA, there is no requirement that the spouse of the account holder be named as beneficiary or even that the spouse consents to the designation of other beneficiaries.

"In some cases, after a spouse has died, the surviving partner has tried to challenge the other named beneficiary receiving the IRA, Matsui says. But spouses have no rights to the IRA except in a handful of states with community property laws when others, such as children from a prior marriage, have been designated as the IRA beneficiaries, she says.

Putting money away for retirement

You may not earn a paycheck, but you can put money away for retirement in your own name.

"It drives me nuts that so many women don't know that they could set up an IRA in their own name," says Cindy Hounsell, president of the nonprofit Women's Institute for a Secure Retirement in Washington, D.C.


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