The IRS recently updated its two model safe harbor explanations that can be used to satisfy the requirement under Section 402(f) to provide notices setting forth certain information to participants who are eligible for rollover distributions. Specifically, Notice 2018-74 modified the safe harbor explanations last amended in 2014 (Notice 2014-74). The recent amendments were made to incorporate the changes from the Tax Cuts and Jobs Act of 2017 (“TCJA”), as well as other recent guidance, into the safe harbor explanations.

As background, Section 402(f) includes certain notification requirements for participants in a qualified plan who are eligible for plan rollover distributions (“section 402(f) notice”). The section 402(f) notice must explain the rules for how to elect a direct rollover to another retirement plan, including the timing requirements and tax deferral implications. The first safe harbor explanation provided in Notice 2018-74 incorporates the rules for distributions from an account that is not a designated Roth account, and the second safe harbor explanation addresses the requirements for distributions from a designated Roth account.