The Internal Revenue Service has issued new guidance amending the safe harbor explanations for notices that plans must provide to recipients of eligible rollover distributions, offering benefit advisers and their employer clients some clarifying guidance on how to proceed with communications.
A written explanation known as an IRC section 402(f) notice must be provided to recipients of eligible rollover distributions from qualified plans, 403(b) plans, and governmental 457(b) plans. This safe harbor notice describes for employees and other plan participants their options to roll over the amounts to defer taxation and the tax implications of taking a distribution. Employers and other plan administrators can use the IRS updated explanations to satisfy these 402(f) notice obligations, the IRS guidance says.
