DC Tax Flash: IRS Allows Retirement Plan Participants to Sign Elections Remotely

Tax Alert

In response to the coronavirus outbreak and related restrictions on social interactions, the Internal Revenue Service (IRS) today issued Notice 2020-42, which temporarily allows certain retirement plan participants and beneficiaries to use remote signatures and notaries for elections.

Applicable in 2020, the guidance explains how a person can use remote notarization with live audio-video technology to satisfy the authorizations and consent requirements of participant elections.

In the case of a participant election witnessed by a plan representative, the IRS explains, a person may use an alternative system if the following requirements are satisfied:

  • The individual must be effectively able to access the electronic medium used to make the participant election;
  • The electronic system must be reasonably designed to preclude any person other than the appropriate individual from making the participant election; 
  • The electronic system must provide the individual making the election with a reasonable opportunity to review, confirm, modify, or rescind the terms of the election before it becomes effective; and 
  • The individual making the election, within a reasonable time, must receive confirmation of the election through either a written paper document or an electronic medium under a system that satisfies the applicable notice requirements.

The eight-page text of Notice 2020-42 is posted here.

An IRS press release is posted here.

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