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IRS Revises “Special Tax Notice” for Participants Receiving Eligible Rollover Distributions

September 10, 2009

Authors: Ira H. Goldman, Richard I. Cohen, Kelly Smith Hathorn

Over the Labor Day weekend, IRS issued Notice 2009-68 and two safe harbor notices that describe to participants the current tax implications of taking a distribution that constitutes an eligible rollover distribution from an employer plan (including a 401(a) qualified plan, a 403(b) plan and a 457(b) governmental plan). You should discuss these new notices with the person or entity responsible for providing the “402(f) Special Tax Notice” to your participants: all employer plans should substitute these new notices for the versions that are currently in use -- and in many instances do not reflect current law -- as soon as possible.

One of the notices should be provided when the distribution is not from a designated Roth account. To access the text of this notice, click here. The other notice is for use when the distribution is from a designated Roth account. To access the text of this second notice, click here. Both notices should be provided when the distribution will include non-Roth and Roth funds. Note that as the law changes, the notices will need to be updated, even if IRS doesn’t immediately provide such an update.

Please contact any member of our Employee Benefits Practice Group if you have any questions.
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