ABA Calls for Permanent Relief from Physical Presence Requirement for Spousal Consent

The American Bankers Association and a coalition of retirement trade groups reiterated their request yesterday that the IRS make permanent its temporary relief from the physical presence requirement for spousal consent. ABA and the groups previously requested permanent relief in letters to the IRS in October 2020 and April 2021.

Under IRS regulations, retirement plans must obtain spousal consent for certain distributions and beneficiary elections, which must be witnessed by a notary or plan representative. The IRS provided temporary relief from the requirement for any participant election witnessed by a notary public of a state that permits remote electronic notarization, or is witnessed by a plan representative that electronically meets certain requirements. The extended temporary relief, which IRS granted in response to an ABA, joint trades letter, is due to expire on June 30, 2022.

“Remote witnessing has worked well during the pandemic and has allowed retirement plan participants to access their benefits, without necessarily jeopardizing their health by physically meeting with a notary public or plan representative,” the groups said.

“Remote witnessing creates a more secure environment for spousal consents than physical witnessing,” it “can also easily be recorded and create an electronic audit trail,” and helps retirement customers “who may have physical limitations and those living in more remote areas.” The trade groups urged the IRS to make the relief permanent without the need for a formal rulemaking.