ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business.
A recent call with a financial advisor from Florida is representative of a common inquiry related to electronic witnessing. The advisor asked: A plan participant would like to use an online notary for a spousal consent waiver for a distribution. Is this permitted?
Highlights of the Discussion
Yes, a properly executed remote spousal consent waiver is permissible and can be used if the terms of the plan document allow for electronic witnessing. A rule REG–114666–22 proposed by the IRS revised the physical presence requirement for spousal consent waivers in Treasury Regulation 1.401(a)-21(d)(6). Remote witnessing by a notary public or a plan representative are now permissible alternatives.
The removal of the “physical presence” requirement provides flexibility to both plan sponsors and plan participants. A plan is not required to permit remote witnessing, nor can it make this the only acceptable method. Plan sponsors must continue to accept waivers signed in the physical presence of a notary in addition to the alternative method.
If a remote notary is used, a live audio-video method is required, and the process must be consistent with State notary laws. In general, the requirements for a notary public or plan representative to witness a spousal consent must satisfy the following requirements:
- The signature of the person signing the consent form must be witnessed and a valid ID must be presented, using live, audio-video technology.
- The signed documents must be sent electronically to the plan representative on the same day they are signed and receipt by the plan representative must be acknowledged.
- The process must be recorded and retained by the plan.
Please refer to the proposed rules for specific details.
Conclusion
Plan participants, like most people, are more mobile today than ever before. If allowed pursuant to the plan document, participants may utilize compliant electronic media to make participant elections and spousal consents.
Any information provided is for informational purposes only. It cannot be used for the purpose of avoiding penalties and taxes. Consumers should consult with their tax advisor or attorney regarding their specific situation.
©2024, Retirement Learning Center, LLC. Used with permission.
