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Plan Action Required: IRS Issues Updated Safe Harbor Rollover Notices

November 2009

The Internal Revenue Service recently issued (in IRS Notice 2009-68) two updated model rollover notices for use by plan administrators. The new notices update the previously issued "safe harbor" notices to reflect changes in the law and are written in a more reader-friendly manner to make it easier for recipients to understand. In light of the different tax treatment of Roth account distributions from 401(k) and 403(b) plans, the IRS issued two model "safe harbor" notices; one which applies to a designated Roth account distribution and one which applies to a distribution not from a designated Roth account. Plans using the new safe harbor notices to notify plan distribution recipients of their rollover rights, as required by Internal Revenue Code (the "Code") Section 402(f), should begin doing so no later than January 1, 2010. However, because the notices previously issued by the IRS do not reflect certain changes in law, it is suggested that the new notice(s) be used as soon as practicable.

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