ABA: Make permanent physical presence exemption for spousal consents

The American Bankers Association today filed a comment letter recommending the adoption of an IRS proposal to make permanent an exemption to the physical presence requirement for spousal consents—that is, the written consent of the spouse of a retirement plan participant who makes certain elections with respect to the plan. The temporary exemption was first granted during the height of the pandemic in 2020 and has been extended several times by the IRS.

The proposed regulation would expressly authorize any spousal consent implemented electronically that is witnessed by a notary public of a state that permits remote electronic notarization and that meets certain requirements, or that is witnessed by a plan representative electronically that meets certain requirements. ABA strongly supports the IRS proposal because it would allow banks acting as plan sponsors, plan administrators and service providers to offer modernized, improved and cost-effective services to their retail retirement customers and to their client plans. The rule change also would provide a convenient, efficient and flexible means for a bank’s retail retirement investors to obtain spousal consent.

If finalized as proposed, the IRS regulatory requirements would largely reflect the recommendations made by ABA and retirement sector trade associations in previous joint letters.