In light of the COVID-19 pandemic, Georgia Governor Brian Kemp has issued two executive orders offering temporary flexibility for documents that require signature in the presence of a witness. To account for social distancing policies currently in place and hoping to limit the spread of COVID-19, these orders temporarily permit the remote notarization and attestation of documents if certain steps are taken. Retirement plan sponsors considering whether to utilize the relaxed requirements in Georgia and other jurisdictions in light of current health and safety concerns should be mindful of other state and federal considerations, and should document their approach in writing.
New Georgia Requirements
Governor Kemp’s executive orders permit a process that is becoming known as Remote Ink-Signed Notarization (RIN), by which an original document is executed and notarized, but the signer’s signature is witnessed via electronic means. The RIN process is as follows:
- The notary and the signer connect via video teleconference (Zoom, Skype, FaceTime, etc.).
- The signer presents his or her picture ID to the video camera to verify his or her identity to the notary.
- The signer makes a “wet ink” signature on the printed document while the notary watches on video.
- The signer then mails the original, signed document to the notary.
- The notary then provides a wet ink signature and notary seal to the original document. Note that electronic notarial signatures (e.g., DocuSign) are not currently permitted in Georgia.
Under the Georgia guidelines, only a notary who is a lawyer or is under the supervision of a lawyer may use RIN, so signers (or plan sponsors wishing to rely on the RIN-notarized document) will need to confirm the notary is an attorney or is acting at the direction of an attorney.
Other Rules Governing Retirement Plan Consents
It is important to note that these executive orders only apply in Georgia and RIN may not be available in other jurisdictions. Furthermore, Section 417 of the Internal Revenue Code, together with certain Treasury regulations, state that any elections requiring signature before a witness must be executed by the individual in the physical presence of the witness.
In theory, failure to comply with these IRS consent rules could result in a tax qualification error for a retirement plan, and a plan sponsor could be held responsible for the spouse’s benefit, regardless of whether the participant’s benefit has already been paid out of the plan, if the spouse later claims the consent was invalid.
The Internal Revenue Code, however, permits the IRS to provide for special circumstances under which the physical presence rules may be relaxed. At this time the IRS has not yet provided for an exception in relation to the COVID-19 pandemic, but we expect some type of relief or guidance in the near future.
The Bottom Line
While the IRS has not yet issued an exception to the physical presence requirement, plan sponsors may be taking the position that utilizing relaxed state laws governing attestation and notarization is reasonable in the current climate, given safety concerns and the numerous policy measures in other areas of the law designed to curb the spread of the COVID-19 pandemic. We believe this position is reasonable in the absence of IRS guidance, although we recommend that plan sponsors (1) prepare and follow a written remote notarization procedure that complies with any temporary requirements under the laws of the applicable state(s), and (2) revisit the process if/when the IRS provides additional guidance.
If you have any questions regarding these new rules, please contact the MMM Employee Benefits & Executive Compensation team.