On August 12, 2026, the Internal Revenue Service (IRS) issued Notice 2026-49, providing guidance related to direct rollovers of eligible rollover distributions¹ to and from workplace retirement plans, as required under section 324 of the SECURE 2.0 Act of 2022 (SECURE 2.0 Act). The guidance applies to qualified defined benefit (DB) and defined contribution (DC) plans, including 401(k) plans, 403(b) plans, governmental 457(b) plans, simplified employee pension (SEP) plans, SIMPLE IRAs, and individual retirement accounts (IRAs) (excluding IRA-to-IRA rollovers).

Why the IRS issued new rollover guidance

Section 324 of the SECURE 2.0 Act directs the Secretary of the Treasury, or their delegate, to issue guidance to “simplify, standardize, facilitate, and expedite the completion of rollovers to eligible retirement plans.” Guidance through sample forms and related procedures must be easily understood by the average person and be accessible by both the plan sending the funds (distributing plans) and the plan receiving them (receiving plans).

In developing its guidance, the Treasury Department and IRS considered reports from the Government Accountability Office (GAO), which highlighted inefficiencies and inconsistencies in the retirement plan rollover process. These reports found that the lack of standardized procedures causes confusion and places a burden on participants, especially when plans mail paper checks to individuals. This process requires participants to handle the rollover on their own, increasing the risk that funds may be lost or lose value due to missed interest or dividends. The reports recommend updating regulations to require that rollover checks be sent directly to receiving plans rather than participants.

IRS recommendations for secure and efficient rollovers

The Notice includes sample rollover forms that plans may elect to use. Use of the sample forms and proposed rollover procedures is optional. However, the Treasury Department and IRS encourage plans to use them.

The sample forms incorporate the following procedures designed to complete direct rollovers electronically to align with federal policies that promote electronic payments for greater efficiency and security:

• Protecting participants’ personal information through encrypted data transfers and the use of a unique rollover identification number (RIN) assigned by the receiving plan
• Requiring plans to coordinate directly with each other to facilitate the rollover
• Using standardized data and terminology
• Verifying the accuracy and legitimacy of rollover requests before funds are transferred
• Requiring electronic communication and fund transfers whenever possible

If an electronic transfer is not feasible, the distributing plan should make the check payable to the receiving plan “for the benefit of” the participant and send it directly to the receiving plan. Plans are also encouraged to integrate the standardized procedures in the Notice into their systems to further streamline the process. Although using the sample forms is optional, plans are encouraged to adopt the standardized data, procedures, and protocols as outlined in the guidance to help simplify and improve the rollover process.

Proposed five-step procedure to complete a rollover

The sample forms guide plan administrators through the five-step process of directly rolling over retirement savings from an employer plan or IRA to another employer plan or IRA (excluding IRA-to-IRA rollovers). The proposed five-step procedure and associated forms are as follows:

1. Form 1—Participant’s Rollover Request:² The individual securely submits Form 1 to the receiving plan, providing the necessary details for the receiving plan to communicate with the distributing plan about the rollover. The form authorizes the receiving plan to request the rollover on the participant’s behalf and is generally intended for participants who already have accounts in the receiving plan, though new accounts may be allowed before the process proceeds. The receiving plan should immediately inform the participant if any necessary information on Form 1 is incomplete or if its administrator or trustee cannot accept the rollover.
2. Form 2—Receiving Plan’s Request to Distributing Plan:³ After receiving Form 1 from the participant, the receiving plan should assign an RIN and add it to the participant’s authorization. The receiving plan then fills out Form 2, which includes details on secure communication and accepted rollover transfer methods, and securely sends Form 2, along with the participant’s authorization, to the distributing plan.
3. Form 3—Distributing Plan’s Rollover Certification:⁴ When the distributing plan receives Form 2, it must independently confirm the participant’s eligibility for a distribution, including verification that the participant requested the rollover, and ensuring that any required spousal consent is obtained. Once these checks are complete, the distributing plan fills out Form 3 and securely sends it to the receiving plan. If the distributing plan cannot confirm the participant’s request or eligibility, it should inform the receiving plan, which must then notify the participant. These steps do not replace other distribution requirements, such as spousal consent or required minimum distribution rules, and any issues must be resolved before completing Form 3.
4. Form 4—Receiving Plan’s Rollover Acceptance:⁵ After receiving Form 3, the receiving plan should fill out Form 4 and send it securely to the distributing plan. On Form 4, the receiving plan specifies the method for receiving the rollover, such as providing an account number or mailing address, and should choose an electronic transfer if available. If only a check is possible, it should be made payable to the receiving plan for the participant’s benefit, with the RIN noted, and sent directly to the receiving plan. The receiving plan should contact the distributing plan to resolve any issues, such as insufficient information or an unmet plan requirement, before filling out Form 4.
5. Funds are Transferred: Once Form 4 is received, the distributing plan should quickly and securely send the participant’s rollover funds to the receiving plan using the details provided. The receiving plan should contact the distributing plan if it does not receive the transfer within a reasonable time after the date the receiving plan transmitted Form 4 to the distributing plan.

Additional rollover guidance under consideration

The Treasury Department and IRS are considering providing additional guidance to make the retirement plan rollover process simpler, more uniform, and faster. Potential future changes include:

• Amending existing regulations to remove the option for plans to send rollover checks to participants for them to complete the rollover.
• Requiring all rollovers to be completed electronically or by sending checks directly between plans.
• Introducing safe harbors for plans that use forms similar to the sample forms. This could include guidance that clarifies that when the sample forms are used, the receiving plan can generally assume the distributing plan is tax-qualified and the rollover is valid, unless there is evidence suggesting otherwise. Or it could include a safe harbor allowing the distributing plan to assume that withholding is not required for the rollover contribution unless there is evidence to the contrary. Such safe harbors would only relate to the rollover process itself and would not affect other distribution requirements, such as obtaining spousal consent or making required minimum distributions.
• Clarifying which practices are not allowed, such as requiring unnecessary paperwork or preventing participants from choosing an electronic rollover if both plans have that capability.

Any potential new requirements (such as requiring electronic transfers or eliminating paper checks) would take effect only after giving plans enough time to update their systems and processes to implement the changes.

The Treasury Department and IRS are seeking written feedback on the proposed guidance, sample forms, and all aspects of section 324 of the SECURE 2.0 Act, especially regarding the use of technology to streamline direct rollovers and suggestions for implementation timelines. Comments should be submitted by October 23, 2026.

Next steps for plan sponsors

Plan sponsors and administrators should review this new IRS guidance along with their plan service providers and consider how the recommended procedures may affect their current rollover processes. For more detailed information or assistance in evaluating the potential impact on your specific plan, consult your Milliman consultant.

¹ An eligible rollover distribution is generally a distribution (or portion of a distribution) from a qualified retirement plan or IRA that can be transferred tax-deferred to another eligible retirement plan or IRA, which is not a required minimum distribution, a hardship withdrawal, corrective distribution or certain periodic payments. Only these types of distributions qualify for rollover treatment under IRS rules.

² See IRS Notice 2026-49. (n.d.). Internal Revenue Service, page 23. Retrieved August 24, 2026, from https://www.irs.gov/pub/irs-drop/n-26-49.pdf#page=23.

³ See IRS Notice 2026-49. (n.d.). Internal Revenue Service, page 25. Retrieved August 24, 2026, from https://www.irs.gov/pub/irs-drop/n-26-49.pdf#page=25.

⁴ See IRS Notice 2026-49. (n.d.). Internal Revenue Service, page 27. Retrieved August 24, 2026, from https://www.irs.gov/pub/irs-drop/n-26-49.pdf#page=27.

⁵ See IRS Notice 2026-49. (n.d.). Internal Revenue Service, page 29. Retrieved August 24, 2026, from https://www.irs.gov/pub/irs-drop/n-26-49.pdf#page=29.