Do plans’ fiduciaries accept a notary’s certificate of an audio-video witnessing?

When a participant seeks one’s spouse’s consent to name a primary beneficiary other than the spouse (or to elect against a survivor annuity), a consent has no effect unless “the spouse’s consent is witnessed by a plan representative or a notary public[.]” ERISA § 205(c)(2)(A)(iii).

Although ERISA does not preclude a notary from using electronic means to furnish the notary’s certificate of a notarial act, a notary must witness the spouse signing the consent. 26 C.F.R. § 1.401(a)-21(d)(6). Until recently, most service providers advised plan administrators that this calls for a spouse to sign a consent in the notary’s physical presence.

Under a proposed interpretation of the statute, a notary may witness the spouse’s signing with physical presence, or by using live audio-video technology and meeting all requirements and conditions under the proposed rule and the State law that applies to the notary. Use of an Electronic Medium to Make Participant Elections and Spousal Consents [notice of proposed rulemaking], 87 Federal Register 80501–80509 (Dec. 30, 2022).

That notice states: “Prior to the applicability date of the final regulation, taxpayers may rely on the rules set forth in this notice of proposed rulemaking.” Id., at 80506.

BenefitsLink neighbors, in your experience:

Are plans’ fiduciaries accepting a notary’s certificate if the certificate shows the notary did the witnessing not by physical presence but rather by audio-video technology?

I have not seen any plans yet rely on electronic notary/ witness. 

I did attend an education session a few years ago that talked about the changes in various state laws (some enacted, some proposed) that allowed virtual electronic notarization and witnessing. It seems primarily something based on state law. With the arrival of the pandemic and lots of wills being updated the session was very relevant and timely. 

I wonder if plans can follow the state law rules for notarization with confidence or if they should stick to a possible more restrictive federal standard of some sort (if it exists). 

justanotheradmin, thank you for sharing your experience.

For an ERISA-governed plan, whether a spouse’s consent is sufficiently witnessed to meet a plan’s provision designed to meet ERISA § 205 is governed by Federal law, not State law.

But a State’s law governs whether a person is authorized to perform notarial acts, and the manner of how a notary performs a notarial act and makes a notarial certificate.

Under the Treasury’s proposed interpretation, a plan could treat a witnessing as enough to meet ERISA § 205 if the witnessing follows both the State law that governs the officiating notary (which might be unrelated to any location of the participant, the consenting spouse, or the plan’s fiduciary) and the Treasury’s proposed rule.

Whether a plan’s administrator should accept or refuse a remote witnessing is a serious question. To support my thinking about that question is why I’m seeking information about whether plans are using or ignoring the Treasury’s proposed interpretation.

BenefitsLink neighbors, do you have other experiences or observations?
 

Without researching, didn’t this get expanded during the COVID shutdown and people accepted this for multiple years?

In 2006, the Treasury department, in a rulemaking that lets many things be done by electronic notices and electronic acts, considered but rejected remote witnessing for a spouse’s consent.

The 2006 rule requires: “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.” 26 C.F.R. § 1.401(a)-21(d)(6)(i) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)-21#p-1.401(a)-21(d)(6)(i). That rule remains in effect.

Regarding the Coronavirus Disease 2019 emergency, IRS Notices provided some temporary relief for 2020, 2021, and 2022. Those Notices might have had some legal effect restraining the Treasury department and, arguably, the Labor department. The Notices had no effect on a spouse’s rights.

On December 30, 2022, the notice of proposed rulemaking (cited above) was published. The IRS’s temporary relief ended with 2022. The proposed rulemaking’s explanation includes: “taxpayers may rely on the rules set forth in this notice of proposed rulemaking.” It is unclear what legal effect that statement has on the Labor department, or even the Treasury department. The Treasury’s explanation had and has no effect on a spouse’s rights.

Although almost two years have passed since the close of the comment period on the 2022 notice, the Treasury department has not acted on the proposed rulemaking. It remains no more than a proposed interpretation.

Further, even if the Treasury’s proposed interpretation were to be published as a final rule and to become effective and applicable, a Federal court deciding a dispute does not defer to an executive agency’s interpretation of a statute. Loper Bright Enterprises v. Raimondo, No. 22-451, 603 U.S. ---, 2024 BL 221307, 2024 LEXIS 2882, 2024 WL 3208360 (June 28, 2024). A Federal court may consider, but must not defer to, an executive agency’s interpretation of a statute. For a question of law not already answered by a judicial precedent, a court must decide a dispute with the court’s interpretation of the statute (ERISA § 205).

I suspect (but don’t know) that some plan fiduciaries accepted some remote-witnessing consents in 2020, 2021, and 2022, especially when physical-presence notary service was hard to get.

I’m much more interested in what plans are doing now.

And I’m wondering whether plan fiduciaries evaluate the risks of remote-witnessing consents.