January 26, 2021 – Beth Nedrow – Holland & Hart – The Benefits Dial

The Covid-19 pandemic has created numerous challenges for retirement plan administrators. One such challenge is how to comply with the requirement to obtain a participant’s written signature to get a distribution from a qualified plan. In plans subject to the QJSA rules, the participant must sign in the presence of a notary or a plan representative. The plain language of the IRS regulation – requiring physical presence – would preclude the use of remote notarization. In June 2020, the IRS issued Notice 2020-42 that provided temporary relief from the physical presence requirement. In December, the IRS extended that relief through June 30, 2021 in Notice 2021-3.

• The relief permits the physical presence requirement to be met by remote notary services that comply with applicable state laws.
• The relief also allows signature to be obtained by live audio-video technology connecting the participant and the plan representative. In that case, certain specific requirements must be met, including that the participant must show a valid photo ID, the participant must fax or e-transmit the signed document to the plan representative on the same date it was signed, and the plan representative must then acknowledge the signature and transmit back to the participant.

Given that e-notary services will remain available and proper for other purposes long after the pandemic is under control, it would be nice if the regulation could be modified permanently. For now, though, the relief is only temporary and plans should be prepared to return to the strict physical presence requirement in July 2021.