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IRS Issues Electronic Communications Regulations
Washington, DC, November 7, 2006 – The Internal Revenue Service (IRS) has issued final regulations that allow retirement plan administrators to take advantage of technology when communicating with plan participants.
In 2000 the Electronic Signatures in Global and National Commerce Act (E-SIGN) was signed into law. E-SIGN gives legal recognition and effect to electronic signatures, contracts, and records; empowers the use of online contracts and provision of notices; and encourages federal agencies to accommodate electronic recordkeeping.
In July 2005, the IRS proposed regulations that provide guidance on the use of electronic media to deliver certain notices to retirement plan participants and beneficiaries and to transmit participant elections relating to employee benefit arrangements. The Institute expressed strong support for the proposal, including the IRS approach to the consumer consent requirement of E-SIGN. ICI also supported a provision that would allow electronic notarization of spousal consent if the individual's signature is witnessed in the physical presence of a plan representative or notary. The Institute also requested that the IRS adopt consistent rules for all IRAs and clarify that the proposed regulations will not affect the current rules governing electronic IRA withholding notices and elections.
Although the final regulations are similar to the 2005 proposed regulations, they include revisions, including those addressing comments by the Institute. For example, the final regulations apply to all individual retirement plans, including Roth IRAs, and allow electronic notarization of spousal consent.
Additional information about electronic communication between retirement plan administrators and participants can be found on this website.