The American Bankers Association along with 17 associations and businesses today sent a joint letter to the IRS requesting that the agency make permanent the temporary relief from the physical presence requirement for spousal consent granted during the early days of the pandemic.
The IRS requires retirement plans to obtain spousal consent for certain distributions and beneficiary elections, which must be witnessed by a notary or plan representative. Treasury regulations, however, allow the IRS to provide in guidance that electronic systems satisfy the physical presence requirement, if those systems provide the same safeguards as witnessing spousal consent in person. In recent notices, the IRS extended its temporary relief (originally announced in Notice 2020-42) for any participant election witnessed by a notary public of a state that permits remote electronic notarization or witnessed by a plan representative electronically meeting certain requirements. The latest relief (announced in Notice 2021-40) is temporary, however, and is due to expire after Dec. 31.
ABA and other signatories noted that remote notarization has proven successful, is popular with participants and is quickly gaining broad acceptance in states. Accordingly, the groups believe it is appropriate for the IRS to make the guidance in Notice 2021-40 permanent.