On August 6, 2020, via Notice 2020-62, the IRS published its updated model notice that can be used to satisfy section 402(f) of the Internal Revenue Code (the “Code”). Under that section, the plan administrator of certain retirement plans (e.g., 401(k) plans and 403(b) plans) must provide a written explanation of applicable tax rules to any recipient of a plan distribution that is eligible to be rolled over to another retirement plan. As under the previous IRS model notice, Notice 2020-62 includes two model notices. The first is for distributions that are not from a Roth account, and the second is for distributions that are from a Roth account.
The new model notices incorporate changes resulting from several pieces of legislation, including the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) and the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). In particular, the new model notices add information about the following rules:
Plan administrators that engage a third-party service provider to draft their Code section 402(f) notice may wish to confirm that their provider will use the new model notices.