Updated Notice Required Before Making Retirement Distributions

Authored by Dannae L. Delano

Dec 03, 2014

The Internal Revenue Service has issued updated safe harbor model notices for use by qualified retirement plans making eligible rollover distributions. Updated safe harbor model notices for distributions from both non-Roth and designated Roth accounts are provided.

In general, administrators of qualified retirement plans must provide a special tax notice to any recipient of a distribution from the plan that is eligible to be rolled over to an individual retirement account (“IRA”) (including a Roth IRA) or another qualified retirement plan (this also includes the 403(a), 403(b) and 457(e) plan written explanation of eligible rollover distribution requirements). The new safe harbor model notices are updated for law changes since 2009 and include the following modifications:

  • Provide for the rollover of automatic contributions that are withdrawn upon the request of the employee within 90 days of enrollment if allowed;
  • Provide for the penalty-free distribution of amounts rolled over to an IRA to pay for certain health insurance premiums;
  • Update the summary of the tax treatment of rolled-over after-tax contributions to provide for in-plan Roth rollovers if allowed; and
  • Update the summary of the tax treatment of rollovers to Roth IRAs.

Please remember that the safe harbor model notices must be modified to reflect the terms of your retirement plan.

If you have any questions about updating special tax notices or any other benefits matter, please do not hesitate to contact Dannae Delano.

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