Pension & Benefits News IRS extends physical presence relief for participant elections
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Monday, January 25, 2021

IRS extends physical presence relief for participant elections

By Pension and Benefits Editorial Staff

The IRS has extended the temporary relief provided in IRS Notice 2020-42 from the physical presence requirement in IRS Reg. §1.401(a)-21(d)(6) for participant elections required to be witnessed by a plan representative or a notary public. This includes the spousal consent required under Code Sec. 417. The extension is from January 1, 2021 through June 30, 2021. The IRS solicits comments with respect to this relief, which is in response to the continuing public health emergency caused by the Coronavirus Disease 2019 (COVID-19) pandemic.

Relief from physical presence requirement. The IRS is extending the following two types of temporary relief (under terms that are identical to the temporary relief provided in Notice 2020-42):

(1) from the physical presence requirement for any participant election witnessed by a notary public of a state that permits remote electronic notarization, and

(2) from the physical presence requirement for any participant election witnessed by a plan representative.

During this temporary relief period, a participant is still able to have a participant election witnessed in the physical presence of a notary public and have that participant election be accepted by a plan under IRS Reg. §1.401(a)-21(d)(6)(i).

Conditions for participant elections. Under the guidance, in the case of a participant election witnessed by a notary public, for the period from January 1, 2021 through June 30, 2021, the individual may 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.

For the same period, in the case of a participant election witnessed by a plan representative, the individual may use an electronic system utilizing live audio-video technology if the following requirements are satisfied:

(1) the individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference, and may not merely transmit a copy of the photo ID prior to or after the witnessing;

(2) The live audio-video conference must allow for direct interaction between the individual and the plan representative (for example, a pre-recorded video of the person signing is not sufficient);

(3) The individual must transmit by fax or electronic means a legible copy of the signed document directly to the plan representative on the same date it was signed; and

(4)  After receiving the signed document, the plan representative must acknowledge that the signature has been witnessed by the plan representative in accordance with the requirements of this guidance and transmit the signed document, including the acknowledgement, back to the individual under a system that satisfies the applicable notice requirements under IRS Reg. §1.401(a)-21(c).

Comment requests. The IRS particularly request comments on whether relief from the physical presence requirement should be made permanent and, if so, what procedural safeguards would be necessary. Comments should be submitted in writing and should include a reference to Notice 2021-03 in one of two ways:

  • (1) Electronically via the Federal eRulemaking Portal at www.regulations.gov (type IRS-2020-0049 in the search field on the regulations.gov homepage to find this notice and submit comments).
  • (2) Alternatively, by mail to: Internal Revenue Service, Attn: CC:PA:LPD:PR (Notice 2021-03), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington D.C.20044.

Source: IRS Notice 2021-03.

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