Compliance News | June 28, 2021

IRS Extends “Physical Presence” Relief

The IRS has extended for one year its temporary option to use e-signatures and video for any participant elections that a plan representative or a notary public must physically witness. In particular, this allows plans to continue to obtain spousal consent to participant waivers of benefit forms for another year without the participant and spouse having to be present in person

Additionally, the IRS is seeking input on the temporary relief.

Couple Reviewing Document

While governmental plans are not subject to any federal rules requiring a physical presence, those requiring in-person notarization may be interested in this guidance.

Background

The COVID-19 pandemic made the physical presence requirement difficult, and, in some cases, dangerous. In response, the IRS relaxed its “physical presence” signing requirement in June 2020. Notice 2020-42 provided temporary audio-video alternatives through December 31, 2020 as options for notaries in states that allowed remote electronic notarization and for plan administrators that wished to use electronic approval.

IRS Notice 2021-3 extended that relief until June 30, 2021.

The latest extension

The latest IRS guidance, Notice 2021-40, extends the relief, without change, to June 30, 2022.

As before, plans are not required to use the audio-video alternative.

The IRS seeks input on the temporary relief

IRS requests comments by September 30, 2021, including on whether:

  • The temporary relief has resulted in fraud, spousal coercion or other abuse
  • The temporary relief should be made permanent in the current or a changed form

Action item

Plan sponsors that are using the temporary audio-video options may continue to use them without change.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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