Section 402(f) of the Internal Revenue Code (“Code”) requires certain information to be provided to plan participants eligible to make rollover distributions. Periodically, the IRS has issued model 402(f) notices. The most recent model 402(f) notice was issued in IRS Notice 2020-62, applies to legislative changes up to August 6, 2020, and includes identification of additional payments that are not eligible for rollover:

• Qualified birth or adoption distributions introduced in the SECURE Act;
• Required minimum distributions that are now based on attainment of age 72;
• CARES Act distributions during 2020.

The IRS model 402(f) notices provide a safe harbor for employers. As in prior model notices, the IRS allows employers to customize the model 402(f) notice by removing provisions not applicable to their plan or to add information about their plan that might be helpful, as long as consistent with the disclosures required under Code Section 402(f).

There are two model 402(f) notices: one for distributions that are not from a designated Roth account, and the other for distributions from a designated Roth account. If a plan distribution includes both, then both notices should be used or the employer can customize by combining the notices.

402(f) notices are required for 401(a) plans (including 401(k) plans), 403(b) plans and governmental 457(b) plans that make distributions that are eligible to be rolled over to an IRA or another qualified plan.

While many third party administrators furnish the 402(f) notices for plan distributions, the compliance obligation remains on the employer sponsoring the plan. Employers should determine whether up to date notices are being used. Employers who furnish their own forms are encouraged to consult Notice 2020-62 for updating language or to seek assistance from counsel in updating the forms.