IRS Updates Safe Harbor Explanations for Rollover Distributions

The Internal Revenue Service released this week updated safe harbor explanations that retirement plan administrators can use to meet federal notice requirements when participants are eligible to receive rollover distributions.

In Notice 2026-13, issued on Thursday, the IRS revised the model explanations required under Internal Revenue Code Section 402(f), which mandates that participants receive written information explaining their rollover options and the potential tax consequences before making an eligible rollover distribution.

The update replaces the prior safe harbor language in Notice 2020-62 and reflects a series of statutory changes enacted since August 2020, most notably provisions in the SECURE 2.0 Act of 2022. It also incorporates recommendations from a 2024 Government Accountability Office report that examined whether existing rollover notices effectively help participants understand their distribution choices.

As before, the IRS provides two separate safe harbor explanations: one for distributions from a designated Roth account and another for distributions that are not. Plan administrators are instructed to provide the explanation that matches the type of account involved. They should provide both explanations if a participant is eligible to receive distributions from both Roth and non-Roth sources.

The IRS stated that the updated explanations are intended to present clearer and more concise information about participants’ options, including leaving money in the plan, rolling it into another employer plan or an individual retirement account, or taking a taxable distribution.

Key Changes

The revised safe harbor explanations account for a wide range of recent legislative and regulatory changes, including:

• New and expanded exceptions to the 10% additional tax on early distributions under Code Section 72(t), such as those for emergency personal expenses, domestic abuse victims, terminally ill individuals and qualified disaster recovery distributions;
• Updates to required minimum distribution rules, including higher starting ages and special rules for surviving spouses;
• Elimination of RMDs for designated Roth accounts in employer plans;
• Higher dollar thresholds for mandatory cash-outs of small balances;
• New rules affecting governmental plan distributions used to pay for health or long-term care insurance; and
• Treatment of pension-linked emergency savings account distributions.

The IRS also added a table of contents and reorganized content to make the explanations easier for participants to navigate.

Customization

While the safe harbor explanations may be used as written, the IRS emphasized that plan administrators and payors may customize them to reflect plan-specific features. Sections that are not applicable—for example, those addressing after-tax contributions or employer stock—may be removed, as long as the remaining explanation still satisfies Section 402(f) requirements.

The IRS cautioned that the updated explanations will remain valid only as long as they accurately reflect current law. Additional updates are expected in the future, particularly as additional provisions of SECURE 2.0 come online in future years.