How Retirement Plan Providers Can Take Advantage of Online Notarization

Saving for retirement is an important step to ensure financial well-being in the future. The decisions your clients make in regards to their retirement are some of the most important ones they will make in their lifetime. Today, retirement plan providers and their customers can take advantage of online notarization to help manage their retirement plans.

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 and guarantee certain spousal rights. The Retirement Equity Act of 1984 amended the Employee Retirement Income Security Act of 1974, adding protections for married couples and requiring spouses to obtain consent before making certain changes to their retirement plans.

As with so many of life's most important moments - from buying a home to building an estate plan - obtaining spousal consent requires witnessing by a notary public. Witnessing can also be performed by a plan representative but finding the time to meet with one can pose a challenge for some consumers. Meeting a notary in person can also be a headache, but that’s where online notarization can come in handy for your clients.

Online notarization can help provide a seamless, digital experience for your customers

In response to the COVID-19 pandemic, the Internal Revenue Service (IRS) recognized consumers needed a way to complete spousal consents from the safety of their homes. The agency took quick action and offered relief that has allowed spousal consents to be completed in front of a notary online for the last two years. In December 2022, the IRS set in motion a process to make this relief permanent which will further modernize the retirement plan industry and offer consumers a secure, safe, and cost-effective solution online.

A number of tech-savvy retirement plan providers are already offering online notarization to their customers, giving themselves a competitive edge in the market and streamlining what used to be an antiquated paper-based process for consumers.

When obtaining a spousal consent waiver, both spouses and retirement plan providers must be confident in the process and use a service that enables error-free transactions and takes certain steps to prevent fraud and address possible instances of spousal coercion.

Every transaction on the Notarize^SM platform begins with verifying a signer's identity, and online notarization gives the notary additional tools to strengthen the traditional ID check that occurs in person. Signers completing an online notarization through the Notarize platform are typically identified through:

• A multi-step identity verification process including: knowledge-based authentication (KBA) and credential analysis, with final validation of identity by a live notary.
• The notary’s personal knowledge of their identity.
• Or, through an oath made by a credible witness. 

Online notarization also creates a more robust record of each transaction than what is commonly captured in person, including:

• Creating an A/V recording of the signing session that is included in each record. This recording shows what the signer looked and sounded like and the circumstances surrounding their signing of the document and can be reviewed if there is ever a question about the transaction. 
• Tamper-evident technology, protecting documents and ensuring their integrity, as well as providing 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 provide spouses and retirement plan providers peace of mind when completing transactions with Notarize, which is already serving the retirement plan industry and is ready to serve your customers today.

If you're a Notarize customer and want to learn more about online notarization for spousal consents, reach out to support@notarize.com.

If you are a retirement plan provider looking for ways to digitize your workflows, click here.

‍NOTE: On December 30, 2022, the IRS proposed to amend regulations permanently to allow spousal consents for plan distributions to be witnessed remotely by a notary or plan representative. Under the proposed regulations — which have been scheduled for public hearing in April 2023 — witnessing by a notary public or by a plan representative in person is no longer required, provided the predetermined process requirements have been met. The predetermined process is similar to that issued by and through the COVID-19 relief iteration, IRS Notice 2022-27. In addition, taxpayers may rely upon this new proposal now, so long as the remote witnessing procedures followed satisfy the proposed regulations.