The International Revenue Service (IRS) proposed permanently accepting remote online notarization (RON). The proposal, if accepted, codifies relief from “physical presence” rules for retirement plan elections and spousal consents. These were first granted during the height of the COVID-19 lockdown.

The Journey of RON and IRS

On June 3, 2020, the IRS temporarily relieved the in-person requirement for notarization. This response came from the challenges posed by COVID-19. The agency extended the relief due to health risks and safety to Dec. 31, 2022. This temporary relief was not expected to be continued; however, on Dec. 30, 2022, the Department of Treasury and the IRS released a notice of proposed rules relating to RON for retirement plan participant elections and spousal consents.

The newly proposed rules apply to retirement plans subject to qualified joint and survivor annuity and eligible preretirement survivor annuity requirements. The spousal consent rules require that a participant’s spouse consent to the participant’s election to take plan distributions or loans.

These proposed rules provide an alternative to in-person witnessing and clarify the rules for using RON. Also, the proposal offers two alternatives to the physical presence requirement:

  • Remote witnessing by a notary public
  • Remote witnessing by a plan representative

The two alternatives are similar to the other options in the temporary relief notices issued in response to the pandemic.

What is Needed for RON?

When a notary or a plan representative witnesses the participant election, the physical presence requirement is deemed satisfied if remote online notarization (RON) is executed via live audio/visual technology. The proposal also clarifies that elections witnessed in person before a notary continue to be accepted.

Remote witnessing by a notary public

The physical presence requirement is satisfied by remote witnessing by a notary public, provided that:

  • The signer’s signature is witnessed by the notary public using audio/video technology that complies with state law
  • The RON transaction is consistent with state law requirements

Remote witnessing by a plan representative

The rules also set standards for remote witnessing regarding the witnessing by a plan representative. The physical presence requirement is satisfied if:

  • The signer’s signature is witnessed using audio/video technology that complies with state law
  • The signer presents a valid photo ID
  • The audio/visual conference allows for direct interaction between the signer and the plan representative
  • The signer electronically transmits a legible copy of the signer document directly to the plan representative on the same date the spousal consent is signed
  • The plan representative acknowledges that the signature was witnessed. They transmit the consent and acknowledgment back to the signer
  • A recording of the transaction is made and retained by the plan representative

All in all, a notary public can witness spousal consents through RON if it satisfies IRS rules for participant elections using electronic media and all state requirements applicable to the notary public.

Retirement Plans Can’t Require RON

Though RON is intended to make notarizations more accessible and more manageable, the proposal clarifies that the plans don’t require RON and don’t have to accept a RON transaction. However, plans do always have to accept spousal consent witnessed in person.

How Will the Proposal Become Permanent?

The IRS website states, “Final regulations are issued after considering the public comments on the proposed regulations.” If accepted, the proposed rules would be effective six months after publication.

The IRS accepts written or electronic comments on the proposal until March 30. A public telephone hearing is s scheduled on April 11, 2023, at 10 a.m. EST. The public hearing will be canceled unless something is received by March 30. If you want to attend the public hearing, requests are due by 5 p.m. EST on April 7.

The Department of the Treasury and the IRS will publish for public availability any comment submitted electronically or on paper to its public docket on www.regulations.gov.

The IRS asked commenters to submit paper submissions addressed to Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. For information concentering the regulation, contact Arslan Malik at 202-317-6700 or Pamela Kinard at 202-317-6000; concerning the submission of comments, the hearing, and the access code to attend the hearing by telephone, Vivian Hayes at 202-317-5306 or email publichearings@irs.gov.

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