Notary Required for Spouse Signature when taking a distribution?

[Guest FREE401k]

Must a spouse's consent to a distribution from a 401(k) Plan be notarized? The Plan document is silent on this, our distribution form says it is required, but an ex-employee is really bucking this. He has over $5000 in the Plan, and in those cases we require spouse's notarized consent. We want to be able to give him a reg or ruling that says this is required, or, if it's not required, we might consider taking it off the form.

Thanks!

[pmacduff]

It's not hard these days to find a notary, I would be suspicious of someone who refuses. Usually this means that something is up and I would press the issue. If the Plan requires the spouse's signature, the notary is simply verifying that it is, in fact, the spouse signing. I've been told that if the plan is not subject to the J&S provisions, the spouse's signature is not required. I think most administrators get the spouse's signature as an additional protection for the plan regarding the distribution. Just my opinion, no cites handy.

[Medusa]

Spousal consent is not required if the plan is really exempt from the joint and survivor requirements. However, it is not always easy to determine whether the plan is truly exempt. Many plans have the joint and survivor language, and state that it only applies under certain conditions. Sometimes the TPA does not have enough historical information to determine whether those conditions kick in.

Consequently, you'll see many TPA's who always require spousal consent, just to be on the safe side. I've always wondered whether the position could be taken by a participant that the plan was not operating in accordance with its terms.

[Guest FREE401k]

Thanks for the responses. I too was suspicious about the participant not wanting to get a notary. He said, "Well, who's gonna pay the $25 or $30 that the notary will cost", and I told him that most banks and many employers provided free notary service. Then he said, "Well, who's gonna make up for the time I have to take off from work to get this done?". He was just being belligert, so I didn't argue any more until I was positive I had my facts right. He told me that his financial person had told him they never heard of the requirement for a notary on the spouse's sig, so I just wanted to make sure we weren't out in left field on this.

[QDROphile]

Look at section 417(a)(2)(A)(i) of the Internal Revenue Code. But the provision may not apply, as suggested by previous posts.

[Guest SPOT]

If the employee doesn't want to go the notary route, usually a plan representative can witness the spouse's signature. Your concern is making sure that the spouse acknowledges the participant's election.

I actually had a participant threaten to send the sherriff after me over spousal consent. Instead of getting mad at us, they need to pay a little more attention to the people who the elect to be our lawmakers.

Sorry, I just get really tired of being yelled at by participants (and spouses) over the consent thing.

[david rigby]

QDROphile has pointed us to the correct IRC citation. Note that the last phrase of that paragraph reads "... and is witnessed by a plan representative of a notary public...".

My read is that the plan sponsor does not have an opportunity to specify only one of these choices in the plan document. Is that correct?

[KJohnson]

Good question PAX. I believe it is perfectly permissible for a Plan to mandate distribution in the form of a QJSA and not allow any other distribution options. So wouldn't it be permissible to only allow waiver of the QJSA in the event that the spouse's signature is notarized and not allow a plan representative to witness the signature.

I know that there are plans, in particular national multiemployer plans where for a number of participants the nearest "plan representative" can be 2000 miles away. In order to treat everyone equally (and to keep their staff from being "bothered") they have eliminated the "plan representative" language from their plans and limited waiver of the QJSA to situations where there are notarized signatures. These Plans have received favorable determination letters.

Again, this all assumes that the 401(k) is subject to the QJSA requirements.

[QDROphile]

I think the plan document can require a notary and let the representative (whoever that is) off the hook. I would question the choice to limit to a notary -- but I can think of a few good answers, too.

[Guest pineapple]

During the GUST process, we removed the reference to plan representative and now require spousal consent in the presence of a notary. The reason we removed the plan representative was so that if a spouse contests a "signed" election form, the plan sponsor wouldn't be on the hook for verifying that the spouse was/was not the person who signed the form.

[david rigby]

Interesting.

A corollary to that is IRC 417(a)(2)(B), where the spouse cannot be located. The statute here refers only to the plan representative, with no reference to notary. This makes much sense; you don't want to rely on someone else to make that determinaition, and the notary would not want to do so.

However, in situations similar to the above, where the plan representative is "carved out" of the spouse signoff procedure, the practicality of a "missing spouse" gets very tricky. Any ideas on this?

[QDROphile]

Carving the representative out of witnessing a signature does not preclude the representative from determining that consent cannot (and therefore need not) be obtained. The functions are different and separate. Careful drafting of the plan document is important, as always.

[Guest pineapple]

As QDROphile indicated, the witnessing of a spousal signature and the determination of a missing spouse are two different processes. The document can be drafted to provide that spousal consent must be witnessed by a notary, and that the determination of a missing spouse is made by the Administrative Committee, Plan Representative, etc.