The Treasury Department and IRS issued Notice 2026-49 (the “Notice”), as mandated by section 324 of the SECURE 2.0 Act, providing sample forms and a process designed to simplify and streamline direct rollovers between retirement plans and individual retirement accounts (IRAs). Currently, plan administrators and service providers have their own forms and procedures that can vary widely from plan to plan, and rely heavily on paper documents/checks. While plans are free to continue using their own forms and procedures, the Notice’s new sample forms and procedural steps provide plan administrators and service providers an alternative common framework to rely on when handling direct rollovers.
Background
Under current rollover regulations, plan administrators may prescribe any reasonable procedure for a distributee to elect a direct rollover and may impose reasonable requirements for a distributee to provide information or documentation to facilitate the rollover. The administrator of a receiving plan may also prescribe a reasonable procedure for verifying that the distribution originated from a qualified plan or IRA and that it is otherwise a valid rollover contribution. According to the Governmental Accountability Office (GAO), however, current rollover procedures are inefficient, largely due to a lack of uniformity, and may lead to participant confusion and frustration. The GAO also cited delays where participants are required to deliver paper distribution checks to receiving rollover institutions.
What the Notice Does
The Notice introduces a five-step process and sample forms designed to (1) protect participants’ personal identifying information; (2) require coordination and communication between plans to minimize participants’ burden; (3) use common terms throughout the process; (4) require plans to ensure the rollover request is legitimate and that the information provided is accurate; and (5) rely on electronic (rather than paper) transactions to the maximum extent possible. This five-step process applies to direct rollovers between qualified plans, 403(b) plans, governmental 457(b) plans, traditional IRAs, SEPs and SIMPLE IRAs. It does not apply to IRA-to-IRA transfers.
The new five-step process:
Step 1 – The participant obtains a Rollover Request Form (Form 1) from – and completes and submits the form to – the “Receiving Plan,” with a signed Rollover Request Authorization (included as part of Form 1). The “Receiving Plan” informs the participant if the form is incomplete or the plan cannot accept the rollover.
Step 2 – The Receiving Plan assigns a “rollover identification number” or “RIN” to the rollover transaction, which the relevant parties can use to track the transaction without including sensitive participant information (e.g., SSNs). The Receiving Plan then sends a Request to Distributing Plan (Form 2) back to the “Distributing Plan”, along with a copy of the Rollover Request Authorization that has been signed by the participant.
Step 3 – The Distributing Plan independently verifies the accuracy of the information on Form 2, then sends a Rollover Certification (Form 3) with information about the plan, the participant’s account, and rollover (payment) methods to the Receiving Plan.
Step 4 – The Receiving Plan sends its Rollover Acceptance (Form 4) to the Distributing Plan and designates the selected rollover method.
Step 5 – The Distributing Plan transfers the rollover to the Receiving Plan using the selected rollover method.
Helpfully, the Notice includes samples of all four Forms that comply with the five-step process.
What the Notice Doesn’t Do
Although the intent of the Notice is to streamline and standardize the rollover process, use of the sample forms and procedures is not mandatory. Plan administrators and service providers remain free to follow their own practices. Moreover, the Notice does not create a formal “safe harbor” for plans that use the sample forms and procedures, although IRS may consider providing safe harbors based on these forms and procedures in the future.
The sample forms and procedures are limited to direct rollover requests. They do not replace the distributing plan’s obligation to additionally provide a description of the available distribution events and optional forms of payment, the Section 402(f) rollover notice, spousal consent forms (if applicable), or any other communications furnished to participants in connection with plan distributions.
Next Steps
Plan administrators should check with their service providers to determine if any changes are being made (or contemplated) as a result of this Notice. Practically, the new system only works if adopted by both distributing plans and receiving plans, and this may take some time. Also, it may be premature to update rollover forms before IRS has confirmed that use of the forms and rollover procedures will provide a safe harbor. Comments on the Notice are due October 23, 2026 and will provide an important opportunity for the IRS to obtain industry feedback about how to make the proposed strategy work. Please reach out to any of the attorneys listed on this alert if you have any questions or are interested in submitting comments to the IRS regarding this proposal.
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