The impact of COVID-19 containment efforts has left many Dallas and Houston businesses relying on technology to manage employees, connect with vendors/suppliers, and generate new opportunities with customers. The use of platforms such as Zoom, Microsoft Teams, and Slack have allowed businesses to keep their workforce engaged and delivering solutions to customers. In fact, reliance on digital technologies during COVID-19 has become so popular that it has even impacted how retirement plan sponsors administer their plans. The IRS recently released guidance permitting plan sponsors to rely on electronic methods to distribute notices and communications. In addition, changes to the physical presence requirement for any participant elections have also been modified to accommodate a remote election process. Although temporary, through the end of 2020, the change means plan sponsors will need to adjust various processes to comply. To help clients, prospects, and others, Calvetti Ferguson has provided a summary of key points below.
Remote Participant Elections
In IRS Notice 2020-42, relief is provided to ensure social distancing requirements are available when complying with the Department of Labor and other plan regulations. According to the Notice, these changes are temporary, only covering the period between January 1, 2020, and December 31, 2020. The Notice specifically addresses the physical presence requirement for any election, which is required to be witnessed by a plan representative or notary public. This includes consents, requests, elections, agreements, or similar communications made by a participant, beneficiary, or individual entitled to benefits under a qualified retirement or individual retirement plan.
Physical Presence Relief
The relief only applies to situations where the election needs to be witnessed by a notary public or plan representative.
Physical Presence – Notary Public
For elections that need to be witnessed by a notary public, the physical presence rules will be satisfied through an electronic platform that uses remote notarization if conducted using live audio-video technology and is consistent with state laws that apply to the notary public.
Physical Presence – Plan Representative
For elections that need to be witnessed by a plan representative, the regulations require specific conditions to be met. The requirement is satisfied when using a system that uses live audio-video technology and meets the following requirements.
- The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference.
- The live conference must allow for direct interaction between the individual and the plan representative.
- The individual must transmit by fax or electronic means a legible copy of the signed document on the date it was signed.
- After receiving the signed document, the plan representative must acknowledge the signature has been witnessed and transmit the signed document, including the acknowledgment, back to the individual.
The benefit of technology has become more apparent as the COVID-19 emergency continues to unfold. The opportunity to receive these requests online can save time and reduce costs in the administration process. If you have questions about the information outlined above or need assistance with your retirement plan audit, Calvetti Ferguson can help.
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