Relief from Physical Presence Requirement Extended
The IRS issued Notice 2021-40, extending guidance released under Notice 2020-42 and previously extended by Notice 2021-03, which provided temporary relief from the physical presence requirements for certain elections that are made by participants and beneficiaries in qualified retirement plans and other tax-favored retirement arrangements. The additional extension provides relief through June 30, 2022. This includes signatures of those making an election ordinarily needing to be witnessed in the physical presence of a plan representative or notary public, including spousal consent and certain forms of distribution from retirement plans.
Under this relief, live audio-video technologies may be used to facilitate remote notarization for distributions if meeting other election requirements and if this is consistent with state laws governing notarization. Also, for certain plan elections that must be witnessed by a plan representative, witnessing may be accomplished by live audio-video technology, but only if certain access, security, review, and confirmation conditions are met.
The IRS has received comments from several stakeholders requesting permanent relief from the physical presence requirement, or asking for additional time to comment. The IRS continues to request comments until September 30, 2021, particularly on cost burdens associated with the physical presence requirement, whether there is evidence that the temporary removal has resulted in fraud, how participant elections are being witnessed, and what procedures and guidance should be implemented to provide safeguards in lieu of existing requirements.