IRS Extends Temporary Relief from “Physical Presence” Requirement Through December 31, 2022

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The IRS recently issued Notice 2022-27, providing a six-month extension of the temporary relief from the physical presence requirement for certain plan elections (including spousal consents) required to be witnessed by a plan representative or notary public. Issued in response to the COVID-19 pandemic, the IRS provided initial relief from the physical presence requirement for the period January 1through December 1, 2020, provided initial extended relief through June 30, 2021, and extended relief for a second time through June 30, 2022. Most recently, Notice 2022-27 extends the relief through December 31, 2022.

The temporary relief from the physical presence requirement applies to any participant election witnessed by a notary public of a state that permits remote electronic notarization or by a plan representative, if certain requirements are satisfied. We discussed those requirements in a prior blog post on this topic.

The IRS’s previous extension notice solicited comments on the topic, including comments regarding whether relief from the physical presence requirement should be made permanent and, if made permanent, what, if any, procedural safeguards should be implemented to reduce potential risks such as fraud or spousal coercion.

Notice 2022-27 states that the Treasury Department and the IRS are currently reviewing the stakeholder comments to determine whether to retain the physical presence requirement without modification or to propose to modify the requirement. If the Treasury Department and the IRS decide to propose to modify the physical presence requirement, they will do so only through the regulatory process, which will include the opportunity for further comment.

The Notice also advises that, considering the recent easing of public health precautions relating to the COVID-19 pandemic, a further extension of temporary relief from the physical presence requirement beyond the end of 2022 is not expected to be necessary.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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