IRS Provides Temporary Signature Relief For Retirement Plan Elections

By Donna Wolfson, Schneider Downs Retirement Solutions

Recognizing the difficulty of meeting a “physical presence” requirement during the COVID-19 pandemic, the IRS on June 3 issued Notice 2020-42, providing temporary relief for certain qualified retirement plan participant elections, including spousal consents, that are typically required to be witnessed in the physical presence of a plan representative or notary public. The relief is retroactive to January 1, 2020, and continues through December 31, 2020.

While Treasury regulations permit electronic notarization of participant elections, the “physical presence” requirement prevents the use of remote notarizations. Notice 2020-42 waives that requirement if certain rules are satisfied. 

In the case of notaries, the relief applies to any consent witnessed by a notary of a state that permits remote electronic notarization. Execution must be via a live audio-video conference that meets the state’s requirements for remote notarization, as well as the normal regulatory requirements for electronic signature.

For participant elections witnessed by a plan representative, the following additional requirements apply:

  • The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference and may not merely transmit a copy of the photo ID prior to or after the witnessing;
  • The live audio-video conference must allow for direct interaction between the individual and the plan representative;
  • The individual must transmit by fax or electronic means a legible copy of the signed document directly to the plan representative on the same date it was signed; and
  • After receiving the signed document, the plan representative must acknowledge that the signature has been witnessed by the plan representative in accordance with the requirements of Notice 2020-42 and transmit the signed document, including the acknowledgement, back to the individual under a system that satisfies the applicable IRS notice requirements.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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