Eligible Rollover Distributions – Safe Harbor Notices Revised

December 2, 2014

Authored by: benefitsbclp

In Notice 2014-74, the Internal Revenue Service (“IRS”) issued amendments to the safe harbor eligible rollover distribution notices – one of which describes the rollover options available to distributions from non-Roth accounts and the other of which describes the rollover options that apply to distributions from designated Roth accounts – for changes in the law and other clarifying changes.  Several of the changes in the non-Roth account notice address the tax effects of in-plan Roth rollovers.  Other changes to both notices incorporate guidance from  IRS Notice 2014-54, which provides an explanation of the allocation of pre-tax and after-tax amounts between distributions to multiple destinations – direct rollover, indirect rollover, directly to participant, traditional IRA and/or Roth IRA.

The descriptions in the safe harbor notices of the tax effects of in-plan Roth rollovers and other distribution choices can be helpful language for participant communications, including summary plan descriptions.  Plan administrators may begin to use these updated model safe harbor notices immediately to satisfy the notice requirements under Section 402(f) of the Internal Revenue Code that apply to eligible rollover distributions.