The Internal Revenue Service has offered brief administrative relief to assist specific retirement beneficiaries or plan participants eager to make participant elections by permitting flexibility for remote signatures.
Published on June 3, Notice 2020-42 gives administrators, plan participants and beneficiaries of eligible retirement plans and other tax-favored retirement arrangements with short-term relief from the physical presence prerequisite for any participant election observed by either a plan representative utilizing certain protections or a notary public in a state that consents to remote notarization. The IRS clarifies that the guidance “accommodates local shutdown and social distancing practices and is intended to facilitate the payment of coronavirus-related distributions and plan loans to qualified individuals, as permitted by the CARES Act.” The guidance states that a person can use an electronic system using live audio-video technology if the following requirements are met:
- The person must be sufficiently able to view the electronic medium needed to create the participant election;
- The electronic system must be practically constructed to preclude any individual other than the correct people from making the participant election;
- The electronic system must offer the person making the election with a sensible prospect to look over, confirm, fix, or rescind the election terms prior to its release; and
- The person making the election, within a realistic time frame, must receive confirmation of the election through either a written form or electronic medium under a system that meets the notice conditions.
To learn more about the notice and what it covers, read the document here.
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