IRS Notice 2026-13 (Jan. 15, 2026)
Available at https://www.irs.gov/pub/irs-drop/n-26-13.pdf
The IRS has updated its safe harbor explanations for eligible rollover distributions from qualified retirement plans, including 401(k) plans. As background, retirement plan administrators must provide recipients of eligible rollover distributions with a written explanation of their rollover options and the tax consequences of distributions within a reasonable time before those distributions are made. To satisfy this requirement, the IRS has provided two safe harbor rollover explanations: one for distributions from a Roth account and another for all other eligible rollover distributions. The updated explanations reflect changes made by the SECURE 2.0 Act and make various clarifications, such as adding a table of contents for ease of use. Here are highlights:
- 10% Tax on Early Distributions. The explanations reflect exceptions to the 10% tax on early distributions added by the SECURE 2.0 Act, including distributions for emergency personal expenses, to domestic abuse victims, or to terminally ill individuals; and other distributions such as qualified disaster recovery distributions and certain distributions to public safety employees and private sector firefighters.
- Required Minimum Distributions (RMDs). The notices no longer expressly reference the age for determining a participant’s required beginning date for RMDs, which has increased to age 73 (and will later increase to age 75). They also reflect changes to the RMD rules for surviving spouses and the elimination of RMDs with respect to designated Roth accounts.
- Cash-Out Amount. The explanations reflect the increase, to $7,000, in the dollar threshold below which a plan may make an immediate lump-sum distribution without participant consent following a distribution event. This threshold also applies for purposes of the rules regarding automatic rollover of mandatory distributions.
- Pension-Linked Emergency Savings Accounts (PLESAs). An explanation of special rules applicable to individuals receiving payment from a PLESA has been added to the notice for rollovers from designated Roth accounts.
As in the previous version of the safe harbor explanations, the IRS reiterates that, to be considered furnished within a reasonable period, the explanation must be provided no less than 30 days and no more than 180 days before the distribution date. Plan administrators may customize the explanations as necessary, for example, by eliminating portions regarding distributions of employer stock if not applicable. Also, use of the safe harbor notices is not required—a plan administrator could use a different explanation so long as all required information is included and the notice is written in a manner designed to be easily understood.
EBIA Comment: To satisfy Code § 402(f), explanations provided to distribution recipients must accurately reflect applicable laws, so law changes identified in the guidance should already be reflected in explanations that plans are currently using. Nevertheless, the updated safe harbor explanations provide useful guidance on what constitutes sufficient disclosure regarding the changes. For more information, see EBIA’s 401(k) Plans manual at Sections XIV.G (“Required Explanation of Rollover Rules (the Rollover Notice)”), XII.I (“Required Minimum Distributions”), XIII.E (“No Consent Required: Cash-Out Exception”), XIV.H (“Automatic Rollover of Mandatory Distributions”), and XIV.K (“10% Additional Tax on Early Distributions”).
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