The IRS has again extended temporary relief from the physical presence requirement for executing certain plan documents in front of a plan representative or notary public in Notice 2022-27.[1] The relief was first provided in Notice 2020-42 as a response to the COVID-19 pandemic and most recently had been extended by Notice 2021-40 through June 30, 2022. The new notice extends this relief through the end of 2022.

This Likely is the Final Extension

This notice indicates that it is likely this will be the final extension of this relief:

On February 18, 2022, the President determined that the COVID-19 pandemic continued to cause a significant risk to public health and safety and extended the national emergency beyond March 1, 2022. See 87 FR 10289. Accordingly, section III of this notice provides an additional 6-month extension, through December 31, 2022, of the temporary relief from the physical presence requirement provided in Notice 2021-40. However, in light of recent easing of public health precautions relating to the COVID-19 pandemic, a further extension of temporary relief from the physical presence requirement beyond the end of 2022 is not expected to be necessary.[2]

One interesting item to note is that the new Notice makes no mention of the request for comments found in Section V of Notice 2021-03, the last extension of this relief. In the preceding Notice the IRS asked for comments on the following:

In particular, the Treasury Department and the IRS request comments on whether relief from the physical presence requirement should be made permanent and, if made permanent, what, if any, procedural safeguards are necessary in order to reduce the risk of fraud, spousal coercion, or other abuse in the absence of a physical presence requirement.[3]

The silence may mean that Treasury has determined, based on comments, that there is no need for any permanent relief from the physical presence requirement. While the agency could still issue proposed changes to Reg. §1.401(a)-21(d)(6), the fact that no mention is made of any plans to issue such proposed regulations and the Notice effectively states that temporary relief will not continue past December 31, 2022 suggests the most likely result is that this provision is no longer being considered for permanent modification.

Items Covered by This Extension

The Notice extends relief for those items covered by Sections III.A and B of Notice 2021-03[4] which duplicated guidance in Notice 2020-42.[5] Notice 2020-42 provided temporary relief from the physical presence requirement found in Reg. §1.401(a)-21(d)(6). That regulation provides:

(6) Participant elections, including spousal consents, that are required to be witnessed by a plan representative or a notary public

(i) In general.

In the case of a participant election which is required to be witnessed by a plan representative or a notary public (such as a spousal consent under section 417), the signature of the individual making the participant election is witnessed in the physical presence of a plan representative or a notary public.

(ii) Electronic notarization permitted.

If the requirements of paragraph (d)(6)(i) of this section are satisfied, an electronic notarization acknowledging a signature (in accordance with section 101(g) of E-SIGN and state law applicable to notary publics) will not be denied legal effect if the signature of the individual is witnessed in the physical presence of a notary public.

(iii) Delegation to Commissioner.

In guidance published in the Internal Revenue Bulletin, the Commissioner may provide that the use of procedures under an electronic system is deemed to satisfy the physical presence requirement under paragraph (d)(6)(i) of this section, but only if those procedures with respect to the electronic system provide the same safeguards for participant elections as are provided through the physical presence requirement. See § 601.601(d)(2)(ii)(b) of this chapter.

The relief found in the applicable provisions of Notice 2021-03 provided relief from the physical presence requirement in the following situations:

Temporary relief from the physical presence requirement for any participant election witnessed by a notary public of a state that permits remote electronic notarization, and
Temporary relief from the physical presence requirement for any participant election witnessed by a plan representative.[6]

The notary public relief read as below and will continue to apply through December 31, 2022, at which time it is expected to be allowed to expire:

…[T]he physical presence requirement in § 1.401(a)-21(d)(6) is deemed satisfied for an electronic system that uses remote notarization if executed via live audio-video technology that otherwise satisfies the requirements of participant elections under § 1.401(a)-21(d)(6) and is consistent with state law requirements that apply to the notary public.[7]

For elections witnessed by a plan representative, the following provisions will continue to apply through December 31, 2022 after which they are expected to be allowed to lapse:

…[T]he physical presence requirement in § 1.401(a)-21(d)(6) is deemed satisfied for an electronic system if the electronic system using live audio-video technology satisfies the following requirements:

(1) The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference, and may not merely transmit a copy of the photo ID prior to or after the witnessing;

(2) The live audio-video conference must allow for direct interaction between the individual and the plan representative (for example, a pre-recorded video of the person signing is not sufficient);

(3) The individual must transmit by fax or electronic means a legible copy of the signed document directly to the plan representative on the same date it was signed; and

(4) After receiving the signed document, the plan representative must acknowledge that the signature has been witnessed by the plan representative in accordance with the requirements of this notice and transmit the signed document, including the acknowledgement, back to the individual under a system that satisfies the applicable notice requirements under § 1.401(a)-21(c).[8]

[1] Notice 2022-27, May 13, 2022, https://www.taxnotes.com/research/federal/irs-guidance/notices/irs-extends-temporary-relief-from-physical-presence-requirement/7dh9j (retrieved May 17, 2022)

[2] Notice 2022-27, May 13, 2022

[3] Notice 2021-03, December 22, 2020, Section V

[4] Notice 2021-03, December 22, 2020

[5] Notice 2022-27, May 13, 2022

[6] Notice 2021-03, December 22, 2020, Section III

[7] Notice 2021-03, December 22, 2020, Section III.A

[8] Notice 2021-03, December 22, 2020, Section III.B