Temporary Relief from “Physical Presence” Requirement for Participant Elections

On June 3, 2020, the Treasury Department issued Notice 2020-42 providing temporary relief from the requirement for a plan representative or notary public to be physically present to witness certain participant elections (including spousal consents), which has been exceptionally difficult to satisfy while following COVID-19 shelter-in-place orders and social distancing guidelines.

Despite wide availability of remote notarization on a state-by-state basis either by statute or executive order (as in New York and Pennsylvania), until this Notice was issued no specific federal guidance permitted remote notarization as an alternative to, or to eliminate, the “physical presence” requirement for participant elections (although the Department of Labor did provide fiduciary guidance in EBSA Notice 2020-01 as discussed in our May 13 blogpost).

Notice 2020-42 provides relief from the “physical presence” requirement for the period of January 1, 2020, through December 31, 2020, provided the following conditions are met:

  1. For participant elections witnessed by a notary public:
    • The plan should confirm that execution was via live audio-video technology and met the general requirements for electronic signature.
    • State law remote notarization requirements applicable to the notary must be met. However, the plan can rely on the notary’s execution of the document as evidence that the remote notarization requirements have been met to the same extent it can rely on the notary’s execution with respect to in-person notarization requirements.
  2. For participant elections witnessed by a plan representative:
    • Execution must be via live audio-video technology that allows for direct interaction between the individual and the plan representative (i.e., prerecorded video is insufficient).
    • The individual signing the participant election must:
      • Present a valid photo ID to the plan representative during the live audio-video conference (i.e., transmitting a copy of the photo ID before or after the live conference is not acceptable) and
      • Transmit electronically (by pdf or fax) a legible copy of the signed document to the plan representative on the same date it was signed.
    • After the plan representative receives the signed document, the plan representative must acknowledge that he or she has witnessed the signature in accordance with the requirements of Notice 2020-42, and transmit the signed document and acknowledgement to the individual meeting the IRS electronic notice requirements:
      • The individual has the effective ability to access that electronic medium and
      • The individual must be advised that he or she may request and receive a paper copy at no charge.

Retirement plan administrators should review their current processes for witnessing participant elections and discuss next steps with benefits counsel.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About Author: Karen Gelula

Karen Gelula counsels public and private companies across industry sectors on all types of employee benefits and executive compensation matters. She advises clients on the design, operation, governance and compliance of qualified retirement plans, and seeks to ensure that employers’ health and welfare benefits plans comply with all applicable federal and state laws, and associated regulations. View all posts by

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