Temporary Relief for Retirement Plan Participants

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Any bookkeeping, business or tax article contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor can it be used to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

Temporary administrative relief has been issued that helps certain retirement plan participants or beneficiaries who need to make participant elections by allowing flexibility for remote signatures. Generally, signatures of the individual making the election must be witnessed by a notary public or in the presence of a plan representative. This includes a spousal consent as well.

Plan participants, beneficiaries, and administrators of qualified retirement plans and other tax-favored retirement arrangements have now been granted temporary relief from the physical presence requirement for any participant election that is:

  • Witnessed by a notary public in a state that permits remote notarization; or
  • Witnessed by a plan representative using certain safeguards.

The guidance was issued as a result of local shutdowns and social distancing practices due to COVID-19 and is intended to facilitate the payment of coronavirus-related distributions and plan loans to qualified individuals, as permitted by the CARES Act. The relief is in effects for the period from January 1, 2020, through December 31, 2020. During this period, a plan participant or beneficiary may use an electronic system facilitating remote notarization if executed via live audio-video technology to satisfy the requirements of participant elections.

In the case of a participant election witnessed by a plan representative, the individual may use an electronic system using live audio-video technology if the following requirements are satisfied:

  1. The individual must be effectively able to access the electronic medium used to make the participant election;
  2. The electronic system must be reasonably designed to preclude any person other than the appropriate individual from making the participant election;
  3. 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
  4. 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.

Don’t hesitate to contact the office if you have questions about this or need additional information regarding tax relief for those affected by the COVID-19 pandemic.

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