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.
The amendments to the safe harbor explanations reflected in the guidance, Notice 2014-74, relate to the allocation of pre-tax and after-tax amounts, distributions in the form of in-plan Roth rollovers, and certain other clarifications to the two safe harbor explanations, the guidance says.
The IRS guidance is divided into two sections, with Part A containing amendments to the safe harbor explanation for payments not from a designated Roth account and Part B containing amendments to the safe harbor explanation for payments from a designated Roth account.
The IRS guidance includes model notices to further assist benefit advisers and their employer clients, as well as other plan administrators.
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