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How Remote Witnessing Helps Your Customers Plan for Retirement

Recent changes at the IRS enable remote witnessing to complete spousal consent waivers for businesses in the financial services industry.
James Fulgenzi
March 25, 2024

Financial advisors are being asked every day to help clients manage their retirement in a digital-first economy. Consumers are more mobile now than ever before and almost all find that technology has improved access to financial services. So, you might be looking for more ways to use online tools to help meet their needs. Thanks to recent changes at the IRS, enabling remote witnessing to complete spousal consent waivers is a great place to start.

When it comes time to make changes to a retirement plan, either a withdrawal or to name a beneficiary, federal laws exist to protect married couples by requiring spouses to obtain consent before making certain changes to qualified retirement plans.

Recently the Retirement Learning Center Resource Desk at the National Association of Plan Advisors responded to a question from a financial advisor about whether remote witnessing is allowed in a spousal consent waiver.

Here is the Q&A: 

A plan participant would like to use an online notary for a spousal consent waiver for a distribution. Is this permitted?
Yes, a properly executed remote spousal consent waiver is permissible and can be used if the terms of the plan document allow for electronic witnessing. A rule, REG–114666–22, proposed by the IRS revised the physical presence requirement for spousal consent waivers in Treasury Regulation 1.401(a)-21(d)(6). Remote witnessing by a notary public or a plan representative are now permissible alternatives.

Thanks to the recent IRS guidance, plan sponsors can now deliver the flexibility their participants have asked for by allowing them to meet with a notary online to complete a spousal consent waiver.

Several tech-savvy retirement plan providers are already leveraging Proof. Proof powers Notarize which helps digitize these transactions and streamline what used to be a process slowed down by in-person notary meetings and paper documents.

Partnering with Proof to digitize your spousal consent workflow provides your organization with much more than just improved customer satisfaction.

Proof can help reduce NIGO scores (“Not In Good Order”), avoiding costly delays from documents submitted with common errors and achieving faster resolution times if something needs to be fixed. 

Proof can also help your organization in its efforts to prevent fraud. Online notarization can uplevel your workflows in customer identity verification through an overall improvement to the traditional notary experience.

Spouses using Proof to meet with an online notary go through a multi-step identity check that improves on the traditional in-person check. In most cases, a signer will undergo:

  • A multi-step identity verification process including knowledge-based authentication (KBA) and credential analysis (checking validity of a government-issued ID), with final validation of identity by a live notary.
  • The notary’s personal knowledge of their identity, or 
  • Identity verification by an oath made by a credible witness. 

Online notarization also creates a more robust record and safer experience than what is offered today in person, including:

  • Creating an A/V recording of the signing session. This recording shows what the signer looked and sounded like when signing the document. It can be reviewed later if there’s ever a question about the transaction. 
  • Tamper-evident technology that protects documents and ensures their integrity. The platform also provides a comprehensive audit trail with the date and time of every signer action taken on the platform.  
  • The ability for the notary to terminate the session if, for any reason, they suspect fraud or coercion of the signer.  

These steps are central to online notarization and were designed to provide spouses and retirement plan providers peace of mind when completing transactions with Proof.

The IRS guidance lays out a series of requirements plan sponsors must meet in order to onboard remote witnessing. Proof has already partnered with several leading retirement plan providers and has the tools available to help your organization meet its compliance needs.

The content provided herein was generated by Proof for general informational purposes only and does not, and is not intended to, constitute legal advice. While we strive to provide accurate content, materials herein may not reflect the most up to date information. Always check with your own attorneys and advisors to obtain advice related to specific matters of law and matters requiring legal interpretation.

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