There have been many changes to life as we know it during the COVID-19 pandemic. Many people have found themselves using technology more than ever before to connect in a remote environment both in personal and professional life. ERISA plans are no exception to this trend towards a digital revolution.
The IRS now allows for remote retirement plan participant elections. As social distancing has been implemented throughout the country, the IRS provides temporary relief to physical presence requirements for spousal and other qualified consents required under Treasury Regulations Section 1.401(a)-21(d)(6).
Notice 2020-42, which covers the period from January 1, 2020 through December 31, 2020 aids in situations in which 1) participant elections need to be witnessed by a notary public (only in states that permit remote notarization) and 2) participant elections need to be witnessed by a plan representative.
Physical presence rules will be satisfied through an electronic system facilitating remote notarization, executed via live audio-video technology that satisfies the requirements of the participant elections under 1.401(a)-21(d)(6) and is consistent with the individual state law surrounding the notary public. These requirements are broad and rely heavily on the state law surrounding notaries.
On the other hand, rules surrounding participant elections witnessed by a plan representative are much more specific. Physical presence rules will be satisfied through the use of audio-video technology with the following requirements:
The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference, and may not merely transmit a copy of the photo ID prior to or after the witnessing.
The live audio-video conference must allow for direct interaction between the individual and the plan representative. A pre-recorded video of the person signing is not sufficient.
The individual must transmit by fax or electronic means a legible copy of the signed document directly to the plan representative on the same date it was signed.
After receiving the signed document, the plan representative must acknowledge that the signature has been witnessed by the plan representative in accordance with the requirements of the notice and transmit the signed document, including the acknowledgement, back to the individual under a system that satisfies the applicable notice requirements.
The use of online meeting systems should be sufficient to satisfy the first two requirements. From there, the individual could scan or send a picture of their document to their plan representative to satisfy the third requirement.
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.