Notice 2020-42 issued to accommodate local shutdowns and
social distancing measures.
The Internal Revenue Service has released guidance temporarily
allowing remote signatures and notarization via live videoconferencing
platforms on retirement plan elections for certain retirement plan participants
or beneficiaries. The purpose of the new guidance, Notice 2020-42, is to
accommodate the ongoing local shutdowns and social distancing measures in place
in light of the ongoing COVID-19 pandemic, and to “facilitate the payment of
coronavirus-related distributions and plan loans to qualified individuals, as
permitted by the CARES Act.”
The temporary administrative relief is effective for the
period running from Jan. 1, 2020, through Dec. 31, 2020, and specifically
relates to signatures of the individual making the election that traditionally
need to be witnessed in the physical presence of a plan representative or
notary public, including a spousal consent (“the physical presence requirement”
under Treasury Regulations Section 1.401(a)-21(d)(6)). During this period, the
individual may instead 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.” In the case of a
participant election witnessed by a plan representative, the 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.