IRS Updated Safe Harbor Explanations for Retirement Plan Administrators: Checklist Tool
The IRS has updated its safe harbor explanations for eligible rollover distributions from retirement plans.
The revised guidance reflects changes to federal retirement rules since the previous explanations were issued.
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What Changed in Notice 2026-13?
Notice 2026-13 supersedes the prior safe-harbor explanation by reflecting SECURE 2.0 legislative updates and GAO guidance. Key changes include:
Notice 2026-13
Key changes to the §402(f) rollover safe-harbor explanations, reflecting SECURE 2.0 and GAO recommendations.
Penalty
10% Penalty Exceptions
Adds updated SECURE 2.0 exceptions to the early-distribution penalty, including new emergency and disaster-related provisions.
Required Minimum Distributions
Reflects the age-73 RMD rule, expanded surviving-spouse options, and the elimination of lifetime RMDs for designated Roth accounts in employer plans.
Cash-Out Threshold
Increases the small-balance mandatory cash-out threshold from $5,000 to $7,000.
Governmental 457(b) Plans
Adds new rules addressing certain health and long-term-care insurance distributions.
SIMPLE IRAs
Adds the applicable rollover restriction language for SIMPLE IRA distributions.
PLESAs
Clarifies that Pension-Linked Emergency Savings Account distributions are not eligible rollover distributions.
Rules
Outdated Provisions Removed
Removes expired COVID-era guidance that no longer applies to current distributions.
Clearer Format
Adds a table of contents and clearer, more concise explanations, consistent with GAO recommendations.
Who Needs to Provide the Safe Harbor Explanation?
The plan administrator or payor of the eligible retirement plan distribution is responsible.
| Plan Type | §402(f) Notice Required? | Responsible Party | Legal Reference |
|---|---|---|---|
| 401(a) qualified plans (e.g., 401(k)) | Yes | Plan administrator | IRC §402(f) |
| 403(a) plans | Yes | Plan administrator | IRC §403(a)(4)(B) |
| 403(b) plans | Yes | Payor (e.g., issuer/recordkeeper) | IRC §403(b)(8)(B) |
| Governmental 457(b) plans | Yes | Plan administrator | IRC §457(e)(16)(B) |
| Non-governmental 457(b) plans | No | — | Not subject to §402(f) |
| 457(f) plans | No | — | Not subject to §402(f) |
| IRAs / Roth IRAs | No | — | §402(f) does not apply |
For IRAs and Roth IRAs, there is no Section 402(f) notice requirement.
Distributions from IRAs, except rollover contributions to IRAs, are not subject to this special rollover notice rule.
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Non-Roth vs. Roth Distribution
The IRS provides two separate model explanations in Notice 2026-13:
- One for distributions not from a designated Roth account and
- One for distributions from a designated Roth account.
| Key Difference | Non-Roth | Designated Roth |
|---|---|---|
| Contributions | Pre-tax | After-tax |
| If You Keep the Money | Generally taxable | Contributions are tax-free; earnings may be taxable |
| Qualified Distribution | Not applicable | Tax-free if the 5-year rule and qualifying event are met |
| Rollover Options | IRA or eligible employer plan | Roth IRA or another designated Roth account |
| 20% Withholding | Generally 20% of the payment for a 60-day rollover | Generally 20% of taxable earnings for a nonqualified distribution |
| 10% Early-Withdrawal Tax | May apply to taxable amounts before 59½ | May apply to taxable earnings before 59½ |
| Lifetime RMDs | Generally apply | No lifetime RMDs |
| 5-Year Rule | No special Roth 5-year rule | Applies to determine qualified distributions |
Administrators can use the IRS-provided templates as-is or modify them.
The IRS explicitly permits customization, instructing that non-applicable sections (e.g., “after-tax contributions” or “employer stock”) may be removed if irrelevant.
As long as all required information is accurately disclosed, the notice will satisfy it.
When Must the Explanation Be Provided?
Plan administrators must provide the safe-harbor notice before any eligible rollover distribution, within a reasonable period as defined by the regulations.
A reasonable period is no less than 30 days and no more than 90 days before the distribution date unless the participant waives the 30-day requirement.
| Event or Task | Timing Requirement |
|---|---|
| Planned Distribution | Provide the 402(f) notice 30–90 days before the distribution |
| Participant Requests Notice | Provide the notice within 30 days of the request |
| 30-Day Waiver | Participant may waive the 30-day period after receiving the notice |
| Periodic Payments | Provide the notice before the first payment |
| Automatic Rollover | Provide the required 402(f) or automatic rollover notice |
| Electronic Delivery | Allowed when applicable e-delivery requirements are met |
| 60-Day Rollover | Participant generally has 60 days after payment to complete the rollover |
Acceptable delivery methods include
- Traditional paper mail or
- Personal delivery.
In all cases, the notice should arrive in sufficient time that the recipient can make an informed decision without delaying payment.
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Actionable Checklist for Administrators
Plan administrators should take the following steps to implement the new safe-harbor requirements and ensure ongoing compliance:
402(f) SAFE-HARBOR COMPLIANCE CHECKLIST
By following this checklist, administrators can incorporate the new safe-harbor rules into their workflow and avoid the risks of noncompliance.
402(f) Rollover Notice FAQ
Eligible rollover distributions from 401(a), 403(a), 403(b), and governmental 457(b) plans generally require a 402(f) notice. IRA distributions do not.
The plan administrator generally delivers the notice for 401(a) and governmental 457(b) plans, while the 403(b) payor delivers it for 403(b) plans.
No, outdated wording may not satisfy current 402(f) requirements. Use the updated safe-harbor language or an equivalent explanation.
The notice must explain rollover options, tax consequences, withholding, eligible rollover destinations, and applicable exceptions to the 10% early-distribution tax.
Yes, certain distributions, including required minimum distributions, corrective distributions, and QDRO payments, generally are not eligible rollover distributions and do not require a 402(f) notice.
The employee generally must receive the applicable notice for each type of distribution, using both the Roth and non-Roth explanations when necessary.
Yes, if the plan accepts after-tax contributions, the notice should explain the applicable rollover and basis rules. Inapplicable sections may be removed.
Yes, a participant can generally waive the 30-day period after receiving the notice and proceed with the distribution sooner.
Failure to provide the required notice can result in an IRS penalty of $100 per failure, subject to an annual maximum of $50,000.
No, IRA distributions are not subject to the 402(f) notice requirement.
You can generally deliver the notice electronically if you satisfy the applicable E-SIGN consent and electronic-delivery requirements.
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