Letter to the IRS on Use of an Electronic Medium to Make Participant Elections and Spousal Consents

Ms. Rachel Levy
Associate Chief Counsel, Office of Chief Counsel
Employee Benefits, Exemption Organizations,
and Employment Taxes
Internal Revenue Service
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Ms. Levy:

The American Bankers Association (ABA) appreciates the opportunity to provide comments to the Internal Revenue Service (IRS) on a proposed rule (Proposal) that would authorize the use of an electronic medium for participant elections and spousal consents. The federal tax laws and implementing IRS regulations require spousal consents to be witnessed by a notary public or a plan representative. The Proposal provides an alternative to the in-person witnessing regulatory requirement by clarifying that certain special rules for the use of an electronic medium for participant elections would apply also to spousal consents. The electronic medium option would be available for certain qualified retirement plans (including 401(k) plans) and its requirements would apply to those plans' sponsors, administrators, and service providers, which include ABA member banks. The Proposal follows several IRS Notices that temporarily have authorized the express use of an electronic medium as an available alternative to in-person witnessing. The Proposal, if adopted, thus would provide permanent relief from the current physical presence witnessing requirement.

We strongly support the Proposal. The ability to employ an electronic medium would provide a convenient, efficient, and flexible means for retail retirement investors to obtain spousal consents. The Proposal further allows plan sponsors, plan administrators, and service providers to offer modernized, improved, and cost-effective services to their retail retirement customers.

By authorizing an electronic alternative to the in-person witnessing requirement, the Proposal further would provide a social benefit to those retirement investors with special needs or requirements, such as (i) those with mobility limitations, (ii) those working a non-traditional schedule (such as first responders, healthcare professionals, and night workers) and (iii) those who reside in rural or remote areas. We therefore would approve the IRS adopting the Proposal in its entirety, subject to the recommendations we have provided below.

Download the comment letter to read the full text.