Compliance Corner

Retirement Updates

IRS Extends Temporary Relief from the Requirement to Obtain Physical Spousal Consent

January 05, 2021

On December 23, 2020, the IRS issued Notice 2021-03 which extends the temporary relief of the physical presence requirement of spousal consent provided by Notice 2020-42 due to the continued COVID-19 public health emergency. Previously, the IRS released Notice 2020-42 (as reported in the June 9, 2020, edition of Compliance Corner), 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 was in response to the social distancing prompted by the COVID-19 public health emergency and applied from January 1, 2020, through December 31, 2020. Now, this relief is extended through June 30, 2021.

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, IRS guidance 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. See our previous article “IRS Gives Relief for the Requirement to Obtain Physical Spousal Consent” for details on the rules to satisfy the physical presence requirement remotely via live audio-video technology.

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 that the temporary relief provided by Notice 2020-42 is now extended through June 30, 2021, and confirm that any procedures are administered in accordance with this new guidance.

IRS Notice 2021-03 »