IRS expands spousal consent remote testimony to pension plan

The IRS has extended through the end of 2022 the COVID-19-related temporary exemption from the requirement that spousal consent to a pension plan distribution must be evidenced in the “physical presence” of the spouse. a notary or a representative of the scheme.

The extension disappointed those who hoped the relief would be made permanent and those who opposed any new remote witnessing permissions for spousal consents.

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

Generally, a spouse’s consent to a plan distribution or loan must be witnessed by a plan representative or notary who is physically present. In order to follow social distancing guidelines put in place due to COVID-19 in 2020, the IRS issued Notice 2020-42, granting temporary relief from the physical presence requirement for 2020, allowing both “remote electronic notarizations” and consents attested by representatives of the scheme.

This relief was extended until June 30, 2022 by Notice 2021-40, and is now extended until December 31, 2022.

In the new notice, the IRS states that “in light of the recent relaxation of public health precautions related to the COVID-19 pandemic, further extension of the temporary waiver of the physical presence requirement beyond the end of 2022 shouldn’t be necessary.”

Remote Testimony Requirements

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

  • The signatory present a valid photo ID during the live audio/video conference.

  • Live audio/video conferencing allows for direct interaction between the individual and the plan representative.

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

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

The IRS option described above is “particularly useful in states that do not [otherwise] allow remote notarization”,
wrote pension consulting firm on October 3.

Support and Opposition

In response to a request for comment from the IRS last year, 17 organizations representing U.S. employers, including the American Benefits Council and the ERISA Industry Committee, wrote
in favor of the sustainability of remote testimony.

Organizations said they “appreciated the relief and extensions that [IRS] previously announced due to the pandemic,” but added, “we believe, however, that permanent relief is warranted, even if the pandemic subsides. We further believe that it should be made available without the need for a formal rule-making process.”

The groups said remote testimony creates a more secure environment for spousal consent than physical testimony and is more convenient for participants who are comfortable with online video tools.

The Pension Rights Center, which represents the interests of pension plan participants,
opposes the extension of remote testimony.

Once “social distancing constraints have been relaxed and in-person access to notaries and scheme administrators restored, [the rationale for remote witnessing] grave,” wrote Karen D. Friedman, executive director of the Pension Rights Center, and Karen W. Ferguson, president of the group. “Therefore, the burden of justifying any permanent change rests with industry and business groups…. who lobbied the Treasury-IRS heavily to eliminate the physical presence requirement for spousal consents. »

Friedman and Ferguson wrote that “business arguments do not stand and should not be credited in supporting a permanent weakening of spousal protections”, which they argue would be undermined by the extension of the testimonial option. from a distance.

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