IRS Notice 2022-27 (May 13, 2022)
Available at https://www.irs.gov/pub/irs-drop/n-22-27.pdf
The IRS has extended, through the end of 2022, its temporary relief from the requirement that certain signatures be witnessed “in the physical presence” of a plan representative or notary public. (The physical presence requirement is imposed under IRS regulations regarding electronic consents and elections for certain retirement plans, including 401(k) plans.) Originally granted in the early days of the COVID-19 pandemic, the relief initially applied for 2020 and has been extended twice since then, most recently through June 30, 2022 (see our Checkpoint article). As set forth in the IRS notice granting the original relief (see our Checkpoint article), the physical presence requirement is deemed satisfied for signatures witnessed by a notary public if the electronic system for remote notarization uses live audio-video technology and is consistent with state-law requirements for a notary public. For signatures witnessed remotely by a plan representative, the physical presence requirement is deemed satisfied if the electronic system uses live audio-video technology and meets four requirements: live presentation of photo ID; direct interaction; same-day transmission; and return with representative’s acknowledgment.
The relief has now been extended through December 31, 2022, subject to the same conditions. According to the IRS, a further extension of the relief beyond the end of 2022 is not expected to be necessary. The IRS is currently reviewing comments received in connection with the initial relief and subsequent extensions to determine whether to retain or permanently modify the physical presence requirement. Any modification would be proposed through the regulatory process, which would include the opportunity for further comment.
EBIA Comment: Given that the return to in-person interactions has happened in fits and starts, this extension is likely to be appreciated by participants and plans alike. While many 401(k) plans are designed to limit or eliminate the need for spousal consents, those that offer annuity forms of distribution are subject to the spousal consent rules. And some 401(k) plans must require spousal consent if a married participant wants to name a non-spouse as primary beneficiary. For more information, see EBIA’s 401(k) Plans manual at Sections XIII.G (“Spousal Consent to Distribution May Be Required”), XXVIII.H.3 (“Spousal Consents and Other Participant Elections That Must Be Witnessed”), and XXVIII.I (“Electronic Administration Chart”).
Contributing Editors: EBIA Staff.