Compliance Corner

Retirement Updates

IRS Gives Relief for the Requirement to Obtain Physical Spousal Consent

June 09, 2020

On June 3, 2020, the IRS released Notice 2020-42, providing temporary relief for participant elections required to be witnessed by a plan representative or a notary public, including a required spousal consent. This relief is in response to the social distancing prompted by the COVID-19 public health emergency and applies from January 1, 2020, through December 31, 2020.

As background, when spousal consent is required for distribution payments or a plan loan, it is required that such consent be physically witnessed by a notary public or plan representative. However, Notice 2020-42 now provides that if certain rules are satisfied, there is temporary relief from the physical presence requirement for any participant election witnessed by a notary public or plan representative.

More specifically, the physical presence requirement for a participant election witnessed by a notary public is satisfied for an electronic system that uses remote notarization if executed via live audio-video technology (that otherwise satisfies the requirements of participant elections and adheres with state laws applicable to the notary public). Further, the physical presence requirement for a participant election witnessed by a plan representative is satisfied for an electronic system if executed via live audio-video technology that meets the following criteria:

  • The individual signing presents a valid photo ID during the live audio-video conference.
  • The live audio-video conference must allow for direct interaction between the individual and plan representative.
  • The individual must transmit (via fax or electronic means) a copy of the signed document directly to the plan representative on the same date it was executed.
  • The plan representative must acknowledge the signature has been witnessed by the plan representative in accordance with these requirements and must send the executed document (and acknowledgement) back to the individual via a system satisfying certain requirements for electronic notice.

Although intended to assist in providing distribution payments and plan loans related to COVID-19 (as expanded by the CARES Act), this temporary relief applies to any participant election requiring an individual’s signature to be witnessed in the physical presence of a plan representative or notary.

Employers should be aware of the temporary relief provided by Notice 2020-42 and confirm that any procedures are administered in accordance with this new guidance.

IRS Notice 2020-42 Â»