Physical Presence Requirement Relief Extended Through June

The relief is for retirement plan participant elections and spousal consent required to be witnessed by a plan representative or a notary public.

The IRS, in Notice 2021-03, has extended the temporary relief it provided from the physical presence requirement for spousal consents under qualified retirement plans from January 1, 2021, through June 30, 2021, due to the ongoing crisis created by the COVID-19 pandemic. In addition, the requirement that participant elections be witnessed by a plan representative or notary public will also be lifted through that time.

As a way of background, the IRS notes that on March 13, President Donald 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. Rather than physical presence, retirement plan sponsors can use electronic mediums to send notices to recipients or permit participants to make elections with respect to their retirement plan, the IRS says.

However, the individual must be able to access the electronic medium and it must be reasonably designed to preclude anyone other than the appropriate person from making the election. The electronic system must also “provide the individual making the participant 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 participant election, within a reasonable time, must receive confirmation of the election through either a written paper document or an electronic medium that satisfied the applicable notice requirements,” the IRS says.

Likewise, a participant’s consent to a distribution may be provided through the use of electronic media, the IRS says.

The IRS says that “remote electronic notarizations differ from electronic notarizations in that remote electronic notarizations generally are conducted remotely over the internet using digital tools and live audio-video technologies, whereas electronic notarizations can be signed electronically but still require that certain signatures be witnessed in the physical presence of a notary public or plan representative.”

The IRS first passed the relief for participant elections in June, in response to the COVID-19 pandemic and related social distancing guidelines. The IRS said the temporary relief, which covered all of this year, was intended to facilitate the payment of coronavirus-related distributions (CRDs) and plan loans, as permitted by the Coronavirus Aid, Relief and Economic Security (CARES) Act. It also applied to any participant election that requires the signature of an individual to be witnessed in the physical presence of a plan representative or notary.

The Treasury Department and the IRS are welcoming comments with respect to the extension of these measures through June 30. Comments should be submitted in writing and should include a reference to Notice 2021-03. They can be submitted two ways. They can be filed electronically at by typing IRS-2020-0049 in the search field. They can also be mailed to the Internal Revenue Service, Attention Notice 2021-03, Room 5303, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044.