Temporary Relief for Spousal Consent and Notary

Ary Rosenbaum
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

The Internal Revenue Service (IRS) is providing temporary relief from the physical presence requirement for witnesses and notaries for participant elections that must be witnessed or notarized.

Notice 2020-42 provides relief for participant elections made from January 1, 2020, through December 31, 2020.

Internal Revenue Code Section 417 does require spousal consent for a waiver of a qualified joint and survivor annuity in a defined benefit plan. The spousal consent has to be witnessed by a Plan representative or a notary public. Also, under Code Section 401(a)(11), spousal consent is also generally required in a defined contribution plan if a participant wants to designate a beneficiary other than the participant’s spouse.

Thanks to the COVID-19 pandemic, the IRS has provided the following temporary relief:

  • Temporary relief from the physical presence requirement for any participant election witnessed by a notary public of a state that permits remote electronic notarization, and
  • Temporary relief from the physical presence requirement for any participant election witnessed by a plan representative.

For a participant election witnessed by a notary public, the physical presence requirement is deemed satisfied for an electronic system that uses remote notarization if executed via live audio-video technology that is consistent with state law requirements that apply to the notary public.

However, in the case of a participant election witnessed by a plan representative, the following additional requirements apply:

  • The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference and may not merely transmit a copy of the photo ID before or after the witnessing;
  • The live audio-video conference must allow for direct interaction between the individual and the plan representative ;
  • The individual must transmit by fax or email, 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 following the requirements of this IRS notice and transmit the signed document, including the acknowledgment, back to the individual under a system that satisfies the applicable notice requirements under the Treasury Regulations

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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