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KEYWORD:
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Employee Benefits Bulletin, January/February 2002ARE YOU USING THE CORRECT ROLLOVER NOTICE?The Internal Revenue Code requires that plan administrators provide a notice to participants receiving an eligible rollover distribution. The notice must describe the various plans or arrangements where the participant may direct the rollover, the difference between a direct rollover and a distribution to the participant that is rolled over to an IRA or other qualified plan within 60 days, the mandatory withholding rules and tax consequences of amounts that are not rolled over, and distributions that may be subject to different restrictions and tax consequences after being rolled over. The IRS has previously provided a model notice for employers to use. Plan administrators should be sure that participants receiving retirement plan distributions in 2002 are provided with the new model notice (or a modified version of it) describing the tax consequences of plan distributions as modified by EGTRRA. The notice is effective for distributions beginning January 1, 2002. However, the IRS is allowing a transitional period for compliance which will end on April 14, 2002. The new notice must still be provided within a reasonable period of time before the distribution is made (i.e., no more than 90 days, no less than 30, subject to waiver, before the date of distribution). Final IRS Regulations also allow the notice to be issued through electronic media reasonably accessible to distributees, provided a written form is available at no cost if requested. For a copy of the new model notice or for further information, please contact Diane Averitt.
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