The Internal Revenue Service on June 3, 2020 issued guidance via Notice 2020-42 temporarily permitting plan participants to use remote signatures or remote notarizations in order to make plan-related elections. Since then, the IRS has issued Notice 2021-03, which extends this physical presence waiver (which was originally set to expire on December 31, 2020) through June 30, 2021.
Under current law, certain participant elections are required to be in writing and signed by the participant’s spouse in the physical presence of a plan representative or notary public. The requirement for signed documents generally applies to requests for distributions (other than a qualified joint-and-survivor annuity), loans, hardships and when an individual other than the participant’s spouse is designated as the participant’s beneficiary.
In Notice 2020-42, the IRS acknowledges that current social distancing practices make it impractical for participants and their spouses to sign documents in the physical presence of a plan representative or notary public. The IRS also takes notice of the actions in several states that have permitted, on a temporary or emergency basis, the use of videoconferencing technology as a substitute for in-person notarization. Accordingly, the IRS provided relief for participant elections requiring notarization or signatures to be done remotely, as follows:
Remote Notarizations: Participants in states that permit authorized notarizations to be done remotely will be able to use such tele-notary services for plan-related elections provided they are done in a manner consistent with the notary rules in their state.
Witness by Plan Representative: For participants who cannot use tele-notary services, either because they live in a state that does not permit them or cannot locate a notary to provide those services, Notice 2020-43 also waives the physical presence requirement for elections that are witnessed by a plan representative provided the following steps are taken:
The individual signing the participant election must present a valid photo ID to the plan representative during the live videoconference and may not merely transmit a copy of the photo ID prior to or after the witnessing
The live videoconference must allow for direct interaction between the individual and the plan representative (for example, a prerecorded video of the person signing is not sufficient);
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 this notice and transmit the signed document, including the acknowledgement, back to the individual either in paper form or by email to an address the participant has designated to receive plan-related documents.