In response to the COVID-19 pandemic, the IRS has provided temporary relief from the requirement that spousal consent for retirement plan loans, distributions, and beneficiary designations take place in the physical presence of a plan representative or notary public.
IRS Notice 2020-42 provides for the physical presence requirement to be deemed satisfied during calendar year 2020 under the following conditions:
Notary Public Witnessing
A spousal consent is acceptable if it is executed during a remote notarization session utilizing video technology that is consistent with applicable state laws regarding remote electronic notarization requirements.
Plan Representative Witnessing
A spousal consent executed during a remote live videoconference is acceptable if:
- The spouse provides his or her valid photo ID to the plan representative during the remote videoconference;
- The remote live videoconference allows the spouse to interact directly with the plan representative;
- The spouse faxes or transmits electronically the signed document to the plan representative on the day of signing; and
- The plan representative acknowledges his or her witnessing of the signature per the requirements of Notice 2020-42 and returns the signed document with the acknowledgment to the spouse.
There are some states, including Georgia, which currently allow some version of virtual notarizations.
Employers using third-party administrators for spousal consent administration should verify whether these third-party providers allow for remote notarization. If so, employers should confirm that remote notarizations are being conducted in accordance with the latest IRS relief guidelines and applicable state law.
Employers that administer spousal consents in-house should consider whether to allow a plan representative to witness spousal consents, even if this is not a regular procedure.
Spousal consent requirements are typically written into an employer’s plan document. Employers that elect to utilize IRS temporary relief for spousal consent should review plan provisions addressing those requirements to determine whether a plan amendment is necessary to avoid a potential violation.