In response to the COVID-19 pandemic, Notice 2020-42 was passed in June, waiving the requirement for a notary public or plan administrator to be physically present to witness retirement plan changes and spousal consent. This temporary suspension was intended to be valid through the end of 2020.
The decision to allow electronic employee benefit arrangements was extended through June 2021 to continue protecting the health and safety of all involved parties. But that expiration date is rapidly approaching, and with vaccines rolled out and CDC protective recommendations easing, the physical presence requirement is set to resume.
This presents a challenge for the many organizations who have decided to permanently operate remotely. Some companies no longer have a physical office to hold such meetings. Other companies have taken advantage of remote work to open themselves up to the global talent pool and have employees who can’t realistically meet plan administrators or notaries.
Now what?
Brokers must reach out to their clients as soon as possible about this topic and help them make a game plan for going forward. With companies easing into their new definitions of normal, this topic may not be top of mind for them -- brokers should change that.
If you have not already, reach out to your clients to find out their current and future plans. If they are operating fully or partially in the office, this may not be an issue. If they are operating fully remotely and/or hiring from a global talent pool, there may need to be some strategizing.
Options you can present to your clients include:
- Reimbursement for travel necessary for all parties to meet in person
- Renting temporary office space for shorter periods to schedule plan updating meetings during a set week or month
- Make sure plans are updated before the June 30th expiration date
Starting client conversations with potential solution options will help ease uncertainty or anxiety about this challenge.
Will remote witnessing continue?
The U.S. Chamber of Commerce has appealed to the IRS to change the temporary physical presence relief into a permanent decision.
“The use of remote witnessing has streamlined plan administration during the pandemic and allowed for individuals to gain access to their accounts who may not otherwise have been able to satisfy the physical presence requirements. Going forward, we believe that remote witnessing should be allowed alongside the physical presence option to help plan administrators in streamlining plan operations and assist participants” The Chamber wrote in a statement released in April 2021.
Other organizations, like the American Bankers Association, have made similar requests. While it’s not certain yet whether or not remote witnessing will be a permanent option, the effort to secure it is being made
We will keep our blog updated with further developments on this topic as they become available so be sure to check back for additional information.
Sources:
https://www.irs.gov/pub/irs-drop/n-21-03.pdf
https://www.uschamber.com/comment/comments-irs-permanent-relief-remote-witnessing-procedures
