Updated IRS rollover distribution notices


Stacking quarters

Does your qualified retirement plan pay benefits that may be eligible rollover distributions? The IRS requires employers to provide advance notice to participants of their eligibility to rollover the distribution rather than incur taxable income, possibly a penalty and lose the continued opportunity to save the distribution for retirement in another plan. This isn’t a new requirement under IRC Section 402(f), just an updated safe harbor notice. Update your notices (and remind your vendors to do the same) with the model attached to Notice 2018-74.

What’s changed? The new rollover distribution notice includes longer rollover deadlines from the Tax Cuts & Jobs Act (TCJA); procedures for participants to waive or extend the 60-day deadline; and amended exceptions for the 10 percent early distribution tax for certain federal and public safety workers. Roth rollovers from governmental 457(b) plans are also addressed.

Which plans? Generally, 401(a), 403(a), 403(b) and 457(b) plans apply.

When? Now is good. Notice 2018-74 did not provide a mandatory implementation date.

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