American Benefits Council urges easing in-person consent rules for distributions

Regulations requiring in-person spousal consent for certain defined benefit plan distributions need to be changed amid the COVID-19 pandemic, the American Benefits Council said in letters to congressional leaders and Treasury Department officials.

"Such a physical presence requirement is directly contrary to the critical health needs of the country," said Lynn Dudley, senior vice president for global retirement and compensation policy at the American Benefits Council, in a letter sent to congressional leaders Monday.

Currently, spousal consent is required for a pension plan participant to receive their benefits in a lump sum and certain other forms. In addition, the regulation states spousal consent needs to be witnessed in the "physical presence" of a plan representative or notary.

"It is clearly dangerous and inappropriate to ask families to jeopardize their health to obtain funds that are so desperately needed," Ms. Dudley said in the letter.

The American Benefits Council urged congressional leaders to include the bipartisan Securing and Enabling Commerce Using Remote and Electronic Notarization Act, referred to as the SECURE Notarization Act, in the next broad coronavirus relief package. The bill, which was introduced in March by Sens. Mark R. Warner, D-Va., and Kevin Cramer, R-N.D., would permit the immediate nationwide use of remote online notarizations, a type of electronic notarization where the notary and signer are in different physical locations.

"Americans shouldn't have to risk their health or safety to execute important financial or legal documents, especially when they could do so from the safety of their own home," Mr. Cramer said in a news release. "The SECURE Notarization Act brings the notary process into the 21st century, allowing people to securely complete documents while still following recommended health and social practices amid the coronavirus pandemic."

In a separate letter sent Monday to Treasury officials, Jan Jacobson, senior counsel for retirement policy at the American Benefits Council, called on the department to issue non-regulatory guidance to permit the use of electronic substitutes for the physical presence requirement.

Either the Treasury or congressional avenue would rectify the issue, said Kent A. Mason, a partner with Davis & Harman and outside counsel for the American Benefits Council. "This is an equity issue," Mr. Mason said. "In this time, you don't want these people who desperately need their money to jeopardize their health to get it."

A Treasury representative could not immediately be reached for comment.

Both letters pointed to an April 17 announcement from the Federal Retirement Thrift Investment Board that temporarily waived the requirement to notarize a spouse's signature on withdrawal election forms due to the pandemic. The board administers the $601.5 billion Thrift Savings Plan, the retirement system for 5.9 million federal employees and members of the uniformed services.

As of Jan, 1, 22 states had already adopted laws enabling notaries to perform remote notarizations, according to the thrift board. And in response to the coronavirus pandemic, at least 21 states have issued emergency orders that accelerate the effective dates of laws that would permit remote notarization or temporarily waive certain provisions of laws that would otherwise impede the availability of remote notarization, the board said.