Certain retirement plan distribution and participant loan applications require a spousal consent to be signed by the participant’s spouse. The consent serves as a protection of spousal rights in plans that otherwise provide for benefit distributions in the form of an annuity that includes a survivor annuity for the spouse (a “qualified joint and survivor annuity”).
REQUIREMENTS UNDER CURRENT LAW
Under current law, these consents must be witnessed by a notary public or plan representative who is “physically present” at the signing. However, current remote working practices and social distancing measures during the COVID-19 pandemic make it difficult, and in some cases impossible, for participants to receive plan distributions and loans (including coronavirus relief distributions and loans pursuant to the CARES Act) for which spousal consent is required.
IRS NOTICE 2020-42 RELIEF PROVISIONS
In response to this situation, IRS Notice 2020-42 provides temporary relief from the “physical presence” requirement for certain signoffs witnessed at a live audio-video conference. However, such proceedings must satisfy the following requirements in the case of participant elections witnessed by a plan representative:
• The signer must present a valid photo ID to the representative at the conference;
• The live conference must allow direct interaction between the signer and the representative as the election document is signed;
• The signer must transmit a legible copy of the signed document directly to the representative by fax or email on the date of the signing conference;
• The representative must acknowledge that the signature has been witnessed by the representative in accordance with Notice 2020-42 and transmit the acknowledged document back to the signer by means of the electronic medium in place for participant notices and elections.
The same requirements will apply to notarized signoffs in states that permit remote electronic notarizations.
WHICH PLANS ARE AFFECTED?
These relief provisions apply only to qualified retirement plans (not to health and welfare plans) and are available for the period from January 1, 2020 through December 31, 2020.
For participants who are otherwise not able to access their retirement plan funds, and employers who would like to help, the use of widely available live audio-video tools can restore plan operations even when participants, spouses or “plan representatives” are on full coronavirus lockdown. Employers also need to consider whether or not their fiduciary responsibilities to plan participants might require them to provide electronic conferencing capabilities for this purpose.
WE CAN HELP
Golan Christie Taglia is available to assist with any questions or concerns that you may have about this recent temporary exception, or any of the other benefit relief provisions available through the CARES Act as outlined in our prior benefit alerts. For additional details or to discuss your particular situation, please feel free to contact: