Temporary, Alternative Procedures for Spousal Consent Approved By IRS

While the CARES Act allows plan participants the opportunity to take greater distribution and loan amounts, it did not consider the challenges social distancing would have on plans with a qualified joint survivor annuity (QJSA) provision. Namely, the requirement for spousal consent to be witnessed in the physical presence of a plan representative or notary public. Enter the Internal Revenue Service (IRS) Notice 2020-42 from June 3, 2020, which applies to any QJSA distribution or loan for the period January 1, 2020, through December 31, 2020.

Under the IRS’s notice, there are two approved methods to satisfy the physical presence requirement:

– Elections witnessed by a plan representative:

» All the following must be met for the QJSA approval by a plan representative to be satisfied:

  • The individual signing the participant election presents valid photo identification during the live audio-video conference,
  • The audio-video conference of the direct interaction between the individual and the plan representative must be live,
  • The signed document must be sent directly to the plan representative the same day it was signed, and
  • Upon receiving the signed document, the plan representative must acknowledge they witnessed the signature in accordance with the requirements of IRS Notice 2020-42. The signed document is then returned to the individual along with an acknowledgement in accordance with the IRS regulatory requirements for electronic notices.

– Elections witnessed by a notary public:

» The remote notarization is deemed to be met if it is executed through the means of live audio-video technology. All other regulatory and state law requirements that apply to the notary public must also be satisfied.

To view the complete IRS Notice, please visit IRS Notice 2020-42.