New IRS Guidance Amends Retirement Rollover Safe Harbors

On Sept. 18, 2018, the IRS released Notice 2018-74, which provides guidance on updating the safe harbor notice required to be sent to plan participants receiving eligible rollover distributions. As background, the IRC requires certain qualified retirement plans (namely 401(a), 403(a), 403(b) and 457 plans) to provide participants with a notice in advance of the participants receiving eligible rollover distributions. Among other things, the safe harbor notice does the following:

  • Explains the IRC rules for rollovers
  • Notifies the participant that they may transfer their funds to any qualified retirement account
  • Discusses the various tax implications of a rollover

Notice 2018-74 modifies prior Notice 2017-74 to include changes to the retirement plan tax rules that occurred as a result of last year’s tax reform and other regulatory changes. Specifically, the guidance provides two appendices employers can utilize to provide updated notices. Appendix A includes appropriately updated model notices in case the employer would simply like to replace their previous safe harbor notice. Appendix B provides instructions on how an employer can amend their current notice to reflect the changes in the law and regulations.

While the notice does not give a specific date by which employers should implement the change, it’s best for employers to replace or update the notice accordingly so they can provide employees with the most current information.

Notice 2018-74 »