NOTE: This article has been updated to reflect that the end date for this relief provision has been extended to June 30, 2021. See IRS Notice 2021-03 for details.
Some retirement plans contain “Qualified Joint & Survivor Annuity” (QJSA) provisions whereby, in order for the plan participant to take a distribution or a loan exceeding $5,000 from the plan, a spouse must sign a consent form to waive their rights to receive the distribution in the form of survivor annuity payments from the plan. In addition, all plans require that a spouse consent if the participant names a primary beneficiary other than the spouse. In these situations, the spousal consent must be witnessed by a Notary Public or Plan Representative. Due to the COVID-19 pandemic, the IRS realizes individuals may have a difficult time obtaining a witness’ signature on retirement administrative documents. In Notice 2020-42, the IRS provides relief from the spouse’s consent being witnessed “in person” by the Notary or Plan Representative. Through
the end of 2020 June 30, 2021, the new guidance allows electronic witness of the spousal consent, with certain restrictions.
When a Notary Public Provides Electronic Witness
Under the new guidance, Notaries may only witness the spouse’s consent electronically if:
- state law allows (some states currently allow for electronic Notary services; some do not)
- the notarization process is done in a “live” (not pre-recorded) audio-video technology process (e.g., Zoom meeting, Skype, etc.)
- the Notary follows all other current state regulations for performing the notarization
When a Plan Representative Provides Electronic Witness
In order for the Plan Representative to electronically witness and approve the spouse’s signing of the waiver, the following restrictions must be met:
- The audio-video electronic meeting (e.g., Zoom, etc.) must allow for direct, real-time interaction between the parties.
- The spouse must present a photo identification during the live electronic meeting so that the Plan Representative can verify identity.
- After the Plan Representative witnesses the spouse’s signing of the waiver, the participant must submit the signed document the same day. This means the form must be faxed or scanned/emailed to the Plan Representative that day, as opposed to being mailed via USPS.
- The Plan Sponsor must return acknowledgement to the spouse and participant that the spouse’s signature was witnessed.
- The IRS does not define “Plan Representative.” Best practice is to have an authorized representative of the company sign the form or have this individual officially designate someone such as a Human Resources staff member, company executive, or plan trustee to witness the spousal consent.
- While the relief from “in person” witnessing of the spousal consent is set to expire on
December 31, 2020June 30, 2021, the consent itself does not expire.
- Participants, notaries and plan sponsors are advised to keep sufficient records of the interaction, such as a recording of the electronic conference, if possible, along with the electronic copies of all forms.
If you are uncertain if this relief impacts your retirement plan, or if you have any questions about this new relief, contact your TRI-AD Client Service Manager.
TRI-AD and our Associates’ suggestions or recommendations shall not constitute legal advice. No content on our website can be construed as tax or legal advice and TRI-AD may not be considered your legal counsel or tax advisor. Clients are encouraged to consult with their tax advisor and/or attorney to determine their legal rights, responsibilities, and liabilities. This includes the interpretation of any statute or regulation, federal, state or local; and/or its application to the clients’ business activities.