IRS Lends a Hand on 402(f) Notices
Plan administrators of qualified plans must provide participants that receive eligible rollover distributions with a written notice under Internal Revenue Code Section 402(f). In prior guidance issued in 2018, the IRS provided two safe harbor 402(f) notices that plans could use to meet the requirements of Section 402(f); one safe harbor notice was provided for payments from a designated Roth account, and the other was provided for payments from non-Roth accounts. The 2018 safe harbor notices reflected the law at the time, but were required to be updated for any subsequent changes in law.
This week, the IRS has released updated safe harbor 402(f) notices to reflect recent legislative change made, including changes in law made by the SECURE Act. These changes include qualified birth and adoption distributions and the change from age 70 ½ to 72 for RMDs. The Notice also clarifies that there is no 402(f) notice requirement for coronavirus-related distributions. Plan administrators may rely on these new safe harbor notices to satisfy Section 402(f) and the changes in law as of August 6, 2020. If you have questions about the 402(f) notice requirements or any other benefit issues, please reach out to any of Graydon’s employee benefits attorneys.