The Internal Revenue Service (IRS) and Department of the Treasury issued Notice 2026-13 on January 15, 2026 — a key update for retirement plan sponsors and administrators responsible for communicating rollover distribution options to participants. This guidance revises the safe harbor explanations previously provided and aligns them with recent legislative and regulatory changes.
Under Internal Revenue Code Section 402(f), plan administrators must provide participants with written explanations of their eligible rollover distribution options and the associated tax consequences before distributions occur. Notice 2026-13 updates the model safe harbor explanations, giving administrators two versions to choose from: one for distributions from non-Roth accounts and another for Roth accounts. If a participant is eligible for both, administrators should provide both explanations.
So what changed? The updated safe harbor language reflects tax law developments since 2020, including provisions of the SECURE 2.0 Act of 2022 and policy recommendations from a Government Accountability Office (GAO) report aimed at improving participant understanding of distribution choices. The revisions address:
· New and expanded exceptions to the 10% early-withdrawal penalty, such as those covering emergency expenses and terminal illness;
· Revisions to required minimum distribution (RMD) rules, including later RMD ages and rules for surviving spouses;
· Elimination of RMDs for designated Roth accounts in employer plans; and
· Structural updates like a table of contents to make notices easier to navigate.
Plan administrators may customize the safe harbor explanations to reflect specific plan features (for example, omitting sections that don’t apply). Using these updated explanations helps satisfy ERISA and IRS disclosure requirements while reducing fiduciary and compliance risk.
As retirement law continues to evolve, Notice 2026-13 represents an important step toward clearer, more accurate communication with participants facing rollover decisions. (IRS)
