Source – National Association of Plan Advisors – December 23, 2020
In response to the continuing public health emergency caused by the COVID-19 pandemic, the Internal Revenue Service has extended remote notarization relief issued in June.
Specifically, Notice 2021-03 extends from Jan. 1, 2021, through June 30, 2021, the temporary relief provided in Notice 2020-42, 2020-26 I.R.B. 986, from the physical presence requirement in Treasury Regulation § 1.401(a)-21(d)(6) for participant elections required to be witnessed by a plan representative or a notary public—oh, and it solicits comments with respect to the relief.
In that Notice, the IRS notes that on March 13, 2020, President Trump determined that the COVID-19 pandemic was of sufficient severity and magnitude to warrant an emergency determination under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, and that “providing alternative procedures for notarization and consent related to plan distributions that do not require physical presence” was deemed to be “an appropriate emergency protective measure during this declared emergency period,” consistent with the physical distancing procedures implemented by the states.
The American Retirement Association, along with a number of other industry associations, had requested this relief earlier this year.
What It Means
The now-extended Notice 2020-42 provided participants, beneficiaries, and administrators of qualified retirement plans and other tax-favored retirement arrangements with temporary relief from the physical presence requirement for any participant election witnessed by either:
- a notary public in a state that permits remote notarization; or
- a plan representative using certain safeguards.
Under the guidance, in the case of a participant election witnessed by a notary public, for the period noted, the individual may 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.
For the same period, in the case of a participant election witnessed by a plan representative, the IRS explained that individual may use an electronic system using live audio-video technology if the following requirements are satisfied:
- the individual must be effectively able to access the electronic medium used to make the participant election;
- the electronic system must be reasonably designed to preclude any person other than the appropriate individual from making the participant election;
- 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
- 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.
Notice-2021-3 will appear in Internal Revenue Bulletin (IRB) 2021-02, dated Jan. 11, 2021.