# Prop. Treas. Reg. § 1.401(a)-21: Rules relating to the use of an electronic medium to provide applicable notices and to make participant elections and spousal consents. Proposed regulation, not in force. REG-114666-22, 87 FR 80501, published 2022-12-30 . Interprets 26 U.S.C. § 401. Par. 2. Section 1.401(a)-21 is amended by: 1. Revising the section heading; 2. Revising the first sentence of paragraph (a)(1)(i) and the heading of paragraph (a)(1)(ii); 3. Revising paragraphs (a)(1)(ii)(A) and (C); 4. Revising paragraphs (a)(2)(i) and (ii); 5. Revising the heading of paragraph (a)(2)(iii); 6. Revising the last sentence of paragraph (a)(3)(i) and revising paragraph (a)(3)(ii); 7. Revising the heading and first sentence of paragraph (a)(4); 8. Revising paragraph (d); 9. Revising paragraphs (e)(4) and (6) and adding paragraph (e)(8); 10. In paragraph (f), designating Examples 1 through 6 as paragraphs (f)(1) through (6), respectively; 11. Revising newly designated paragraph (f)(3); 12. Revising paragraph (g). The revisions and addition read as follows: (a) * * * (1) * * * (i) * * * This section provides rules relating to the use of an electronic medium to provide applicable notices and to make participant elections and spousal consents with respect to retirement plans, employee benefit arrangements, and individual retirement plans described in paragraph (a)(2) of this section. * * * (ii) Notices, elections, and consents required to be in writing or in written form —(A) In general. The rules of this section must be satisfied for an electronic medium to be used to provide an applicable notice or make a participant election or spousal consent if the notice, election, or consent is required to be in writing or in written form under the Internal Revenue Code, Department of Treasury regulations, or other guidance published in the Internal Revenue Bulletin by the Commissioner. * * * * * (C) Rules relating to participant elections and spousal consents. A participant election or a spousal consent that is made using an electronic medium is treated as being provided in writing or in written form if the requirements of paragraphs (a)(5) and (d) of this section are satisfied. * * * * * (2) * * * (i) Notices, elections, or consents under retirement plans. The rules of this section apply to any applicable notice, participant election, or spousal consent relating to the following retirement plans: a qualified retirement plan under sections 401(a) or 403(a); a section 403(b) plan; a simplified employee pension (SEP) under section 408(k); a simple retirement plan under section 408(p); or an eligible governmental plan under section 457(b). (ii) Notices or elections under other employee benefit arrangements. The rules of this section also apply to any applicable notice or participant election relating to the following employee benefit arrangements: an accident and health plan or arrangement under sections 104(a)(3) and 105; a cafeteria plan under section 125; an educational assistance program under section 127; a qualified transportation fringe program under section 132; an Archer MSA under section 220; or a health savings account under section 223. (iii) Notices or elections under individual retirement plans. * * * (3) * * * (i) * * * The rules in this section also do not apply to section 411(a)(3)(B) of the Code (relating to suspension of benefits), section 4980B(f)(6) (relating to an individual's COBRA rights), or any other Code provision over which the Department of Labor or Pension Benefit Guaranty Corporation has similar interpretative authority. (ii) Recordkeeping and other requirements. The rules in this section apply only with respect to applicable notices, participant elections, and spousal consents relating to a person's rights under a retirement plan, an employee benefit arrangement, or an individual retirement plan. Thus, the rules in this section do not alter the otherwise applicable requirements under the Code, such as the requirements relating to tax reporting, tax records, or substantiation of expenses. See section 6001 for rules relating to the maintenance of records, statements, and special returns. See also section 101(e) of E-SIGN, which provides that if an electronic record of an applicable notice, a participant election, or a spousal consent is not maintained in a form that is capable of being retained and accurately reproduced for later reference, then the legal effect, validity, or enforceability of the electronic record may be denied. (4) General requirements related to applicable notices, participant elections, and spousal consents. The rules of this section supplement the general requirements related to each applicable notice, participant election, and spousal consent. * * * * * * * * (d) Special rules for participant elections and spousal consents —(1) In general. This paragraph (d) is satisfied for participant elections or spousal consents if the conditions described in paragraphs (d)(2) through (6) of this section are satisfied. (2) Effective ability to access. The electronic medium under an electronic system used to make a participant election or spousal consent must be a medium that the person who is eligible to make the election or consent is effectively able to access. If the appropriate person is not effectively able to access the electronic medium for making the election or consent, the election or consent will not be treated as made available to that person. Thus, for example, the election will not be treated as made available for purposes of the rules under section 401(a)(4). (3) Authentication. The electronic system used in making a participant election or spousal consent must be reasonably designed to preclude any person other than the appropriate person from making the election or consent. Whether this condition is satisfied is based on facts and circumstances, including whether the election or consent has the potential for a conflict of interest between the persons involved in the election or consent. (4) Opportunity to review. The electronic system used in making a participant election or spousal consent must provide the person making the election or consent with a reasonable opportunity to review, confirm, modify, or rescind the terms of the election or consent before the election or consent becomes effective. (5) Confirmation of action. The person making the participant election or spousal consent must receive, within a reasonable time, a confirmation of the effect of the election or the consent under the terms of the plan or arrangement through either a written paper document or an electronic medium under a system that satisfies the requirements of either paragraph (b) or (c) of this section (as if the confirmation were an applicable notice). (6) Spousal consents required under the Code to be witnessed by a notary public or a plan representative —(i) Witnessing of spousal consent in physical presence of notary public or plan representative. Except as provided in paragraph (d)(6)(ii) of this section, in the case of a spousal consent that is required to be witnessed by a notary public or a plan representative (such as a spousal consent under section 417), the signature of the person signing the consent must be witnessed in the physical presence of a notary public or a plan representative. (ii) Alternative to witnessing of spousal consent in physical presence of notary public or plan representative —(A) Remote witnessing of spousal consent by notary public —( 1 ) In general. As an alternative to witnessing of a spousal consent in the physical presence of a notary public described in paragraph (d)(6)(i) of this section, a plan may accept a consent witnessed remotely by a notary public if the signature of the person signing the consent is witnessed by the notary public using live audio-video technology, the requirements of paragraph (d) of this section for consents are satisfied, and the remote witnessing is consistent with State law requirements that apply to the notary public. ( 2 ) In-person notarization must be accepted by plan. A plan that accepts spousal consents witnessed remotely by a notary public must also accept consents witnessed in the physical presence of a notary public. (B) Remote witnessing of spousal consent by plan representative. As an alternative to witnessing of a spousal consent in the physical presence of a plan representative described in paragraph (d)(6)(i) of this section, a plan may accept a consent witnessed remotely by a plan representative if the signature of the person signing the consent is witnessed by the plan representative using live audio-video technology, the requirements of paragraph (d) of this section are satisfied, and the additional requirements described in paragraphs (d)(6)(ii)(B)( 1 ) through ( 5 ) of this section are satisfied. ( 1 ) Presentation of valid photo ID. The person signing the spousal consent must present a valid photo ID to the plan representative during the live audio-video conference (for example, the person signing the consent may not merely transmit a copy of the photo ID to the plan representative prior to or after the witnessing). ( 2 ) Direct interaction. The live audio-video conference must allow for direct interaction between the person signing the spousal consent and the plan representative (for example, a pre-recorded video of the person signing the consent is not sufficient). ( 3 ) Same-day document transmission. The person signing the spousal consent must transmit by electronic means a legible copy of the signed document directly to the plan representative on the same date that the document is signed. ( 4 ) Plan representative acknowledgement. After receiving the signed document, the plan representative must acknowledge that the signature has been witnessed by the plan representative in accordance with paragraph (d)(6)(ii)(B) of this section and transmit the signed document, including the acknowledgement, back to the person signing the spousal consent under a system that satisfies the applicable notice requirements in paragraph (c) of this section. ( 5 ) Recording and retention of audio-video conference. A recording of the audio-video conference during which the spousal consent was signed remotely must be made by the plan representative and, consistent with paragraph (a)(3)(ii) of this section, must be retained by the plan in accordance with section 6001. (iii) Electronic notarization permitted. If the requirements of paragraph (d)(6)(i) or (d)(6)(ii)(A) of this section are satisfied, an electronic notarization acknowledging a signature (in accordance with section 101(g) of E-SIGN and State law applicable to a notary public) will not be denied legal effect. (e) * * * (4) Electronic record. The term electronic record means an applicable notice, a participant election, or a spousal consent that is created, generated, sent, communicated, received, or stored by electronic media. * * * * * (6) Participant election. The term participant election includes any election, request, agreement, or similar communication made by or from a participant, beneficiary, alternate payee, or person entitled to benefits under a retirement plan, employee benefit arrangement, or individual retirement plan as described in paragraph (a)(2) of this section. * * * * * (8) Spousal consent. The term spousal consent means a written consent signed by a participant's spouse that meets the requirements of section 417(a)(2)(A). (f) * * * * * * * * (3) Example 3. (i) Facts involving participant election for plan loan and related notarized spousal consent. Plan C, a qualified money purchase pension plan, permits a married participant to request a plan loan through Plan C's website with the notarized consent of the spouse. Under Plan C's system for requesting a plan loan, a participant must enter the participant's account number and personal identification number (PIN) (in order to preclude any person other than the participant from making the election) and the participant's email address. The information entered by the participant must match the information in Plan C's records in order for the transaction to proceed. Participant M, a married participant, is effectively able to access the website available to apply for a plan loan. Participant M completes the loan documents on Plan C's website. (A) After receiving the completed loan documents, Plan C notifies Participant M that Participant M's spouse must sign a spousal consent for the plan loan that is witnessed by a notary public or plan representative. The spousal consent form includes sections for the signature, email address, and mailing address of Participant M's spouse. Participant M's spouse signs the spousal consent for the plan loan, and the signature is witnessed in the physical presence of a notary public. Participant M's spouse provides the notarized spousal consent to Participant M, and Participant M scans the notarized spousal consent and uploads it to Plan C's website. (B) After Plan C receives the spousal consent, Plan C sends an email to Participant M with attached loan documents, giving Participant M a reasonable period of time to review and confirm the loan documents and to determine whether the plan loan should be modified (such as editing the account number or decreasing the loan amount) or rescinded. Using the email address provided on the spousal consent form, Plan C also sends an email to Participant M's spouse that attaches the signed spousal consent and gives Participant M's spouse a specified reasonable period of time to review and confirm the spousal consent and to determine whether the spousal consent should be modified or rescinded. The email also notifies Participant M's spouse that Participant M's spouse may request a written paper copy of the signed spousal consent and that, if Participant M's spouse requests a written paper copy of the signed spousal consent, it will be provided at no extra charge. (C) Participant M makes no changes to the loan documents, and Participant M's spouse makes no changes to the spousal consent. After Plan C processes the loan documents, including the notarized spousal consent, Plan C notifies Participant M that the loan documents have been processed. In addition, the notice provides that Participant M may request a written paper copy of the loan documents and that, if Participant M requests a written paper copy of the loan documents, it will be provided at no charge. Plan C retains an electronic copy of the loan documents, including the notarized spousal consent, in a form that is capable of being retained and accurately reproduced for later reference by all parties. (ii) Conclusion. In this paragraph (f)(3) ( Example 3 ), the electronic transmission of the participant election for a plan loan and related notarized spousal consent satisfies the requirements of paragraphs (a), (c), and (d) of this section. * * * * * (g) Applicability date —(1) In general. Except as otherwise provided in paragraph (g)(2) of this section, the rules provided in this section apply to applicable notices provided and to participant elections and spousal consents made on or after (the date that is six months after the final regulation is published in the Federal Register ). (2) Special applicability date rules for periods before the general applicability date. Section 1.401(a)-21, as it appeared in the April 1, 2022, edition of 26 CFR part 1, applies for periods before the general applicability date in paragraph (g)(1) of this section.