The IRS is temporarily allowing retirement plan participants to forgo in-person witnessing of election changes as long as remote, electronic witnessing performed by a notary is facilitated.
According to the agency, Notice 2020-42 provides participants, beneficiaries, and administrators of qualified retirement plans and other tax-favored retirement arrangements with temporary relief from the physical presence requirement for any participant election:
(1) witnessed by a notary public in a state that permits remote notarization, or
(2) witnessed by a plan representative using certain safeguards.
The guidance accommodates local shutdowns and social distancing practices and is intended to facilitate the payment of coronavirus-related distributions and plan loans to qualified individuals, as permitted by the CARES Act.
“For the period from [retroactively] Jan. 1, 2020, through Dec. 31, 2020, the individual may use an electronic system facilitating remote notarization if executed via live audio-video technology that otherwise satisfies the requirements of participant elections and that is consistent with state law requirements that apply to the notary public,” the notice states.
Conditions
For the same period, in the case of a participant election witnessed by a plan representative, the individual may use an electronic system using live audio-video technology if the following requirements are satisfied:
- The individual must be effectively able to access the electronic medium used to make the participant election.
- The electronic system must be reasonably designed to preclude any person other than the appropriate individual from making the participant election.
- The electronic system must provide the individual making the election with a reasonable opportunity to review, confirm, modify, or rescind the terms of the election before it becomes effective; and
- The individual making the election, within a reasonable time, must receive confirmation of the election through either a written paper document or an electronic medium under a system that satisfies the applicable notice requirements.
“The relief granted by IRS Notice 2020-42 eliminates, at least temporarily, one practical problem caused by the social distancing and stay-at-home measures currently in effect as a result of the public health emergency caused by the COVID-19 pandemic,” Boston-based Wagner Law Group said in a statement.
THE FULL IRS NOTICE CAN BE FOUND HERE
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
