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IRS Allows Remote Signature/Notarization for Retirement Plan Elections

IRS Allows Remote Signature/Notarization for Retirement Plan Elections

Notice 2020-42 issued to accommodate local shutdowns and social distancing measures.

The Internal Revenue Service has released guidance temporarily allowing remote signatures and notarization via live videoconferencing platforms on retirement plan elections for certain retirement plan participants or beneficiaries. The purpose of the new guidance, Notice 2020-42, is to accommodate the ongoing local shutdowns and social distancing measures in place in light of the ongoing COVID-19 pandemic, and to “facilitate the payment of coronavirus-related distributions and plan loans to qualified individuals, as permitted by the CARES Act.”

The temporary administrative relief is effective for the period running from Jan. 1, 2020, through Dec. 31, 2020, and specifically relates to signatures of the individual making the election that traditionally need to be witnessed in the physical presence of a plan representative or notary public, including a spousal consent (“the physical presence requirement” under Treasury Regulations Section 1.401(a)-21(d)(6)). During this period, the individual may instead 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.” 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:

  1. The individual must be effectively able to access the electronic medium used to make the participant election;
  2. The electronic system must be reasonably designed to preclude any person other than the appropriate individual from making the participant election;
  3. 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
  4. 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.
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