I think what you are saying is that upon retirement, your spouse will receive a $50K contribution from his employer that is taxed at a rate of 20%, and you are wondering if you should take the distribution now, less 20% in taxes, to pay down your mortgage or if you should roll the distribution into a IRA-like account.
I really dislike the idea of depleting your retirement account to zero your mortgage. Find a good investment counselor and put your retirement account to work for you. You need to analyze your cash flow, your other expected future income, your current tax bracket, and what bracket you're likely to fall in at the time you start drawing on your retirement funds.
You should also weigh how much of a return you can expect on your investments compared to the costs of paying down your mortgage.
I hope this information helps you Find. Learn. Save.