IRS Extends Remote Witnessing of Retirement Plan Spousal Consent

The IRS has extended through the end of 2022 the COVID-19-related temporary relief from the requirement that a spousal consent to a retirement plan distribution be witnessed in the "physical presence" of a notary or plan representative.

The extension disappointed those hoping that the relief would be made permanent and those who opposed any further allowance of remote witnessing for spousal consents.

The IRS announced the extension on May 13 in Notice 2022-27.

Typically, a spouse's consent to a plan distribution or loan must be witnessed by a plan representative or a notary public who is physically present. In order to follow social distancing guidelines put in place due to COVID-19 during 2020, the IRS issued Notice 2020-42, which provided temporary relief from the physical presence requirement for 2020. Specifically, the notice allowed for both "remote electronic notarizations" and consents witnessed by plan representatives.

That relief was extended to June 30, 2022, by Notice 2021-40, and is now further extended, to Dec. 31, 2022.

In the new notice, the IRS states that "in light of recent easing of public health precautions relating to the COVID-19 pandemic, a further extension of temporary relief from the physical presence requirement beyond the end of 2022 is not expected to be necessary."

Remote-Witnessing Requirements

Under the relief granted by the IRS, a plan representative can satisfy the witnessing requirement if the plan uses live audio/video technology and:

• The signing individual presents a valid photo ID during the live audio/video conference.
  

• The live audio/video conference allows for direct interaction between the individual and the plan representative.
  

• The individual transmits by fax or electronically "a legible copy of the signed document directly to the plan representative on the same date it was signed."
  

• The plan representative acknowledges witnessing the signature and sends the signed document/acknowledgment back to the individual in accordance with IRS electronic communications regulations.
  

The IRS option outlined above is "especially useful in states that do not [otherwise] permit remote notarization," wrote retirement plan advisory firm October Three.

Support and Opposition

In response to an IRS request for comments last year, 17 organizations representing U.S. employers, including the American Benefits Council and the ERISA Industry Committee, wrote in favor of making remote witnessing permanent.

The organizations said they "appreciate the relief and extensions the [IRS] previously announced due to the pandemic," but added, "we believe, however, that permanent relief is warranted, even as the pandemic abates. We believe further that it should be made available without the need for a formal rulemaking process."

The groups said remote witnessing creates a more secure environment for spousal consents than physical witnessing and is more convenient for those participants who are comfortable using online video tools.

The Pension Rights Center, which advocates on behalf of pension plan participants, opposes the extension of remote witnessing.

Once "social distancing constraints have been eased and in-person access to notaries and plan administrators has been restored, [the rationale for remote witnessing] falls away," wrote Karen D. Friedman, the Pension Rights Center's executive director, and Karen W. Ferguson, the group's president. "Hence, the burden to justify any permanent change rests on the industry and business groups …. that have been heavily lobbying Treasury-IRS to eliminate the physical presence requirement for spousal consents."

Friedman and Ferguson wrote that "the business community's arguments do not hold up and should not be credited to support any permanent weakening of spousal protections," which they said would be undermined by extending the option for remote witnessing.