IRS Temporarily Waives Rule for Retirement Plan Changes

401k, IRS, participant, rules

Important.

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 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

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