Seyfarth Synopsis: The IRS has extended its relief from the physical presence requirement related to certain plan elections through June 30, 2022.
Certain elections for distributions from plans require spousal consent provided in the presence of a notary or plan representative. Although states were relaxing their notarization requirements due to the COVID-19 pandemic, many plan administrators were reluctant to accept remote notarizations for plan elections because a "physical presence" requirement remained in the IRS guidance.
In June 2020, the IRS gave temporary relief from the physical presence requirement in the Treasury Regulations related to plan elections. The relief allowed for elections to be witnessed by a notary public of a state that permits remote electronic notarization using live audio-video technology. It also allowed remote witnessing by plan representatives using live audio-video technology if certain requirements were met. See our prior blog post on this relief here.
In January 2021, the IRS further extended this temporary relief through June 30, 2021. The IRS has now extended the relief for another 12 months through June 30, 2022. The guidance also requests specific comments on whether the relief should be permanent. Among other items, the IRS asked for comment about any costs or burdens associated with the physical presence requirement and whether the removal of the physical presence requirement could cause increased fraud, spousal coercion or abuse.
This guidance will provide plan sponsors and plans continued flexibility as plan participants continue to work remotely to some degree, and particularly with respect to former employees, and we expect that plan administrators would welcome the opportunity to continue to use remote authorizations. In fact, given the widespread acceptance of remote work technologies, including video meetings apps, it makes sense that the IRS is considering making the relief permanent. Seyfarth will continue to monitor how the physical presence requirements for plan elections are evolving.
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