IRS Rolls Out Expanded ?Safe Harbor? Guidelines

December 27, 2001 ( - The Internal Revenue Service (IRS) has released updated guidelines on providing "Safe Harbor Explanations" about rollovers as recently expanded by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).

The written explanation must cover:

  • the direct rollover rules
  • the mandatory income-tax withholding on distributions not directly rolled over
  • the tax treatment of distributions not rolled over (including the special tax treatment available for certain lump-sum distributions)
  • when distributions may be subject to different restrictions and tax consequences after being rolled over.

The EGTRRA-expanded explanation must include information about whether a later distribution from an eligible retirement plan may be subject to restrictions and tax consequences, which are different from the plan that made the first distribution.


Full text of the IRS notice is – or will soon be – at