Social Distancing Prompts Remote Signatures for Retirement Plan Participants

As a result of the COVID-19 pandemic and the rise of social distancing as the new normal, the IRS will be allowing remote signatures, temporarily, for participants and beneficiaries of retirement plans who need to make new plan elections based on a recently released notice. The temporary relief is for the covered period of January 1, 2020, through December 31, 2020. It is in response to the CARES Act passed by Congress on March 27, which allows individuals the ability to take up to $100,000 of coronavirus-related distributions from an eligible retirement plan.

Issued by the IRS on June 3, 2020, Notice 2020-42 lifts the requirement of physical presence for a notary public or plan representative for purposes of retirement plan participant and beneficiary elections. The notice also includes signatures required for spousal consent.

Electronic systems using live audio-video technology during the covered period can now be used to facilitate notarization in satisfaction of the physical presence requirement. The live audio-video technology also must be consistent with state law pertaining to notary public services.

In the case of a participant election witnessed by a plan representative during the covered period, the following requirements must be satisfied:

1. A valid photo ID must be presented by the participant to the plan representative during the live audio-video conference. Transmitting a copy of the ID prior to or after the witnessing is not permitted.
2. Direct interaction between the participant and the plan representative must be enabled during the live audio-video conference. A pre-recorded video of the individual signing is not permitted.
3. A legible copy of the signed document must be sent electronically or via fax to the plan representative on the same date that it was signed.
4. The plan representative must acknowledge that the signature was witnessed by him/her and send confirmation to the individual making the election within a reasonable time. This confirmation must be received in writing or electronically.

For more information on the allowance of remote signatures for retirement plan elections or the CARES Act, please contact your Marcum tax advisor.

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