n-18-74.pdf

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Safe Harbor Explanations – Eligible Rollover Distributions

Notice 2018-74

I. PURPOSE

This notice modifies the two safe harbor explanations in Notice 2014-74,
2014-50 I.R.B. 937, that may be used to satisfy the requirement under § 402(f) of
the Internal Revenue Code (“Code”) that certain information be provided to
recipients of eligible rollover distributions. The safe harbor explanations as
modified by this notice take into consideration certain legislative changes and
recent guidance, including changes related to qualified plan loan offsets (as
defined in section 13613 of the Tax Cuts and Jobs Act of 2017 (“TCJA”), P.L.
115-97) and guidance issued on self-certification of eligibility for a waiver of the
deadline for completing a rollover (described in Rev. Proc. 2016-47, 2016-37
I.R.B. 346), and include other clarifying changes.

To assist with the implementation of the modified safe harbor
explanations, this notice contains two appendices. Appendix A contains two
model safe harbor explanations: one for distributions that are not from a
designated Roth account, and a second for distributions from a designated Roth
account. Appendix B provides instructions on how to amend the safe harbor
explanations contained in Notice 2014-74 to reflect the revisions included in the
modified safe harbor explanations in Appendix A.

II. BACKGROUND
A. Section 402(f)
Section 402(f) requires the plan administrator of a plan qualified under
§ 401(a) to provide the written explanation described in § 402(f)(1) to any
recipient of an eligible rollover distribution, as defined in § 402(c)(4). In addition,
§§ 403(a)(4)(B) and 457(e)(16)(B) require the plan administrator of a § 403(a)
plan, or an eligible §
457(b) plan maintained by a governmental employer
described in § 457(e)(1)(A), to provide the written explanation to any recipient of
an eligible rollover distribution. Further, § 403(b)(8)(B) requires a payor under a
§ 403(b) plan to provide the written explanation to any recipient of an eligible
rollover distribution.
Section 1.402(f)-1, Q&A-1(a), provides that the plan administrator of a
qualified plan is required, within a reasonable period of time before making an
eligible rollover distribution, to provide the distributee with the written explanation
described in § 402(f) (“§ 402(f) notice”).

Notice 2014-74 contains two safe harbor explanations that reflect relevant
law as of December 8, 2014: one safe harbor explanation is for payments not
from a designated Roth account and the other safe harbor explanation is for
payments from a designated Roth account. Notice 2014-74 provides that the
safe harbor explanations may be used by plan administrators and payors to
satisfy § 402(f) to the extent that the explanations accurately reflect current law.

B. Recent Statutory Changes Related to Qualified Plan Loan Offsets

Section 1.402(c)-2, Q&A-3(a), provides that, unless specifically excluded,
an eligible rollover distribution means any distribution to an employee (or to a
spousal distributee described in § 1.402(c)-2, Q&A-12(a)) of all or any portion of
the balance to the credit of the employee in a qualified plan. Section 1.402(c)-2,
Q&A-3(b), provides that certain distributions (for example, required minimum
distributions under § 401(a)(9)) are not eligible rollover distributions.

Section 1.402(c)-2, Q&A-9(a), provides that a distribution of a plan loan
offset amount (as defined in § 1.402(c)-2, Q&A-9(b)) is an eligible rollover
distribution if it satisfies § 1.402(c)-2, Q&A-3. Thus, an amount up to the plan
loan offset amount may be rolled over by the employee (or spousal distributee) to
an eligible retirement plan within the 60-day period described in § 402(c)(3),
unless the plan loan offset amount fails to be an eligible rollover distribution for
another reason.

Section 1.402(c)-2, Q&A-9(b), provides that a distribution of a plan loan
offset amount is a distribution that occurs when, under the plan terms governing
a plan loan, the participant’s accrued benefit is reduced (offset) in order to repay
the loan. This can occur when, for example, the terms governing a plan loan
require that, in the event of an employee’s termination of employment or request
for a distribution, the loan is to be repaid immediately or treated as in default. A
plan loan offset can also occur when, under the terms of the plan loan, the loan is
canceled, accelerated, or treated as if it were in default (for example, when the
plan treats a loan as in default upon an employee’s termination of employment or
within a specified period thereafter). See also § 1.72(p)-1, Q&A-13(a)(2).
Because a plan loan offset is an actual distribution for purposes of the Code, not
a deemed distribution under § 72(p), a plan loan offset cannot occur prior to a
distributable event. See generally § 1.72(p)-1, Q&A-13(b).

Section 13613 of the TCJA amended § 402(c)(3) of the Code to provide
an extended rollover deadline for qualified plan loan offset amounts (as defined
in § 402(c)(3)(C)(ii)). Any portion of a qualified plan loan offset amount (up to the
entire qualified plan loan offset amount) may be rolled over into an eligible
retirement plan by the individual’s tax filing due date (including extensions) for
the taxable year in which the offset occurs.

A qualified plan loan offset amount is defined in § 402(c)(3)(C)(ii) as a plan
loan offset amount that is distributed from a qualified employer plan to a
participant or beneficiary solely by reason of: (1) the termination of the qualified
employer plan, or (2) the failure to meet the repayment terms of the loan from
such plan because of the severance from employment of the participant.
Additionally, under § 402(c)(3)(C)(iv), a qualified plan loan offset may occur only
if the relevant plan loan meets the requirements of § 72(p)(2).

C. Other Recent Statutory Changes
1

Section 100121 of the Moving Ahead for Progress in the 21
st
Century Act
(“MAP-21”), P.L. 112-141, amended chapters 83 and 84 of title 5 of the United
States Code (“U.S.C.”), to permit certain federal retirees to participate in phased
retirement. MAP-21 amended the Code to add § 72(t)(2)(A)(viii), which provides
that if an employee participates in phased retirement, any payments made under
a phased retirement annuity under § 8336a(a)(5) or 8412a(a)(5) of title 5 of the
U.S.C., or a composite retirement annuity under § 8336a(a)(1) or 8412a(a)(1) of
title 5 of the U.S.C., are excepted from the 10% additional tax under § 72(t).

Section 2 of the Defending Public Safety Employees’ Retirement Act
(“DPSERA”), P.L. 114-26, amended § 72(t)(10)(B) with respect to the exception
to the 10% additional tax under § 72(t) on early distributions from a governmental
retirement plan for qualified public safety employees who have reached age 50
by expanding the exception to include specified federal law enforcement officers,
customs and border protection officers, federal firefighters, and air traffic
controllers who have reached age 50, and eliminating the requirement that the
distributions be from a defined benefit plan. Section 306 of the Protecting
Americans from Tax Hikes Act of 2015, P.L. 114-113, includes a list of federal
governmental employees added to the definition of qualified public safety
employee in § 72(t)(10)(B).

D. Other Extensions of 60-Day Rollover Deadline

Rev. Proc. 2016-47 provides guidance concerning waivers of the 60-day
rollover deadline contained in §§ 402(c)(3) and 408(d)(3). Specifically, it
provides for a self-certification procedure (subject to verification on audit) that
may be used by a taxpayer claiming, in specified circumstances, eligibility for a
waiver under § 402(c)(3)(B) or 408(d)(3)(I) with respect to a rollover into a
qualified plan or individual retirement arrangement (“IRA”). A plan administrator

1
Although not requiring modifications to the safe harbor explanations, section 41104 of the
Bipartisan Budget Act of 2018, P.L. 115-123, amended § 6343 of the Code to provide that certain
retirement plan benefits distributed from a plan as a result of an improper levy may, when they
are returned to an individual, be eligible to be rolled over into the plan or an IRA. These amounts
may be rolled over by the tax filing due date (not including extensions) for the tax year during
which the Internal Revenue Service (“IRS”) returns the improperly levied funds to the individual.
As amended, § 6343 provides that, when the IRS returns improperly levied funds, the Secretary
of the Treasury will notify the individual that the returned amount may be eligible to be rolled over.

or an IRA trustee generally may rely on a taxpayer’s self-certification in
determining whether a taxpayer has satisfied the conditions for a waiver of the
60-day rollover deadline.

Rev. Proc. 2007-56, 2007-2 C.B. 388, provides a list of time-sensitive
acts, the performance of which may be postponed under §§ 7508 (relating to
service in combat zones or contingency operations) and 7508A (relating to
taxpayers affected by a federally declared disaster or a terroristic or military
action). Rev. Proc. 2007-56 includes on the list of acts that may be postponed
under §§ 7508 and 7508A the 60-day deadline for rolling over an eligible rollover
distribution to an eligible retirement plan (which includes an IRA).
Rev. Proc. 2007-56 does not, by itself, provide any postponements under
§ 7508A. Rather, for taxpayers to be entitled to a postponement under § 7508A
of any act listed in the revenue procedure, the IRS must publish a notice or issue
other guidance (including an IRS News Release) providing relief with respect to a
federally declared disaster or a terroristic or military action. For example, News
Release TX-2018-05, July 9, 2018, provides tax relief relating to

severe storms
and flooding in Texas.
2

III. MODIFICATIONS TO THE SAFE HARBOR EXPLANATIONS

There are two updated safe harbor explanations appended to this notice
(see Appendix A). The safe harbor explanations modify the safe harbor
explanations in Notice 2014-74 to reflect certain legislative changes and
guidance issued after December 8, 2014, including: (1) the extended rollover
deadline for qualified plan loan offset amounts under TCJA, (2) the exception to
the 10% additional tax under § 72(t) for phased retirement distributions to certain
federal retirees under MAP-21, (3) the expanded exception to the 10% additional
tax under § 72(t) for specified federal employees who have reached age 50
under DPSERA, and (4) the self-certification procedures under Rev. Proc. 2016-
47 for claiming eligibility for a waiver of the deadline for making rollovers. The
safe harbor explanations also include other clarifying modifications, such as
modifications clarifying that the 10% additional tax under § 72(t) for early
distributions applies only to amounts includable in income, explaining how the
rollover rules apply to governmental § 457(b) plans that include designated Roth
accounts, clarifying that the general exception to the 10% additional tax under
§ 72(t) for payments from a governmental plan made after a qualified public
safety employee separates from service (if the employee will be at least age 50
in the year of the separation) is not available for payments from IRAs, and

2
For certain disasters, Congress has enacted legislation providing special rules for distributions
made on account of the disaster. For information on rules applicable to distributions (and the
ability to repay those distributions) made on account of Hurricane Harvey or Tropical Storm
Harvey, Hurricane Irma, Hurricane Maria, the 2017 California wildfires, and certain 2016
disasters, see Publication 976, Disaster Relief. Distributions made on account of these disasters
(assuming certain requirements are met) are not treated as eligible rollover distributions for
purposes of § 402(f). See, for example, section 502(a)(6)(A) of the Disaster Tax Relief and
Airport and Airway Extension Act of 2017, P.L. 115-63.

recognizing the possibility that taxpayers affected by federally declared disasters
and other events may have an extended deadline for making rollovers. For
instructions on how to amend the safe harbor explanations in Notice 2014-74 to
reflect these modifications, see Appendix B. The updated safe harbor
explanations provided in this notice may be used by plan administrators and
payors to satisfy § 402(f). However, the updated safe harbor explanations will
not satisfy § 402(f) to the extent the explanations are no longer accurate because
of a change in the relevant law occurring after September 18, 2018.

The first safe harbor explanation reflects the rules relating to distributions
not from a designated Roth account. Thus, the first safe harbor explanation
should only be used for a distribution that is not from a designated Roth account.
The second safe harbor explanation reflects the rules relating to distributions
from a designated Roth account. Thus, the second safe harbor explanation
should only be used for a distribution from a designated Roth account. Both
explanations should be provided to a participant if the participant is eligible to
receive eligible rollover distributions both from a designated Roth account and
from an account other than a designated Roth account.

The safe harbor explanation in this notice for distributions not from a
designated Roth account meets the requirements of § 402(f) for an eligible
rollover distribution that is not from a designated Roth account if provided to the
recipient of the eligible rollover distribution within a reasonable period of time
before the distribution is made. Similarly, the safe harbor explanation in this
notice for distributions from a designated Roth account meets the requirements
of § 402(f) for an eligible rollover distribution from a designated Roth account if
provided to the recipient of the eligible rollover distribution within a reasonable
period of time before the distribution is made.

Section 1.402(f)-1, Q&A-2, provides, in general, that a reasonable period
of time for providing an explanation is no less than 30 days (subject to waiver)
and no more than 90 days before the date on which the distribution is made.
However, § 1.402(f)-1, Q&A-2(a), of the Proposed Income Tax Regulations,
pursuant to section 1102(a)(1)(B) of the Pension Protection Act of 2006, P.L.
109-280, provides that a notice required to be provided under § 402(f) may be
provided to a participant as much as 180 days before the date on which the
distribution is made (or the annuity starting date). These proposed regulations
further provide that, with respect to the extended period for notices, plans may
rely on the proposed regulations for notices provided during the period beginning
on the first day of the first plan year beginning on or after January 1, 2007 and
ending on the effective date of final regulations. Thus, the § 402(f) notice may be
provided as much as 180 days before the date on which the distribution is made
(or the annuity starting date).

A plan administrator or payor may customize a safe harbor explanation by
omitting any information that does not apply to the plan. For example, if the plan

does not hold after-tax employee contributions, it would be appropriate to
eliminate the section “If your payment includes after-tax contributions” in the
explanation for payments not from a designated Roth account. Similarly, if the
plan does not provide for distributions of employer stock or other employer
securities, it would be appropriate to eliminate the section “If your payment
includes employer stock that you do not roll over.” Other information that may
not be relevant to a particular plan includes, for example, the sections “If your
payment is from a governmental section 457(b) plan” and “If you are an eligible
retired public safety officer and your payment is used to pay for health coverage
or qualified long-term care insurance.” In addition, the plan administrator or
payor may provide additional information with a safe harbor explanation if the
information is not inconsistent with § 402(f).

Alternatively, a plan administrator or payor may satisfy § 402(f) by
providing an explanation that is different from a safe harbor explanation. Any
explanation must contain the information required by § 402(f) and must be written
in a manner designed to be easily understood.

IV. EFFECT ON OTHER DOCUMENTS

Notice 2014-74 is modified.

DRAFTING INFORMATION

The principal author of this notice is Naomi Lehr of the Office of Associate
Chief Counsel (Tax Exempt and Government Entities). For further information
regarding this notice, contact Ms. Lehr at (202) 317-4102 (not a toll-free number).

* * *

Appendix A

For Payments Not From a
Designated Roth Account

YOUR ROLLOVER OPTIONS

You are receiving this notice because all or a portion of a payment you are
receiving from the [INSERT NAME OF PLAN] (the “Plan”) is eligible to be rolled
over to an IRA or an employer plan. This notice is intended to help you decide
whether to do such a rollover.

This notice describes the rollover rules that apply to payments from the Plan that
are not from a designated Roth account (a type of account with special tax rules
in some employer plans). If you also receive a payment from a designated Roth
account in the Plan, you will be provided a different notice for that payment, and
the Plan administrator or the payor will tell you the amount that is being paid from
each account.

Rules that apply to most payments from a plan are described in the “General
Information About Rollovers” section. Special rules that only apply in certain
circumstances are described in the “Special Rules and Options” section.

GENERAL INFORMATION ABOUT ROLLOVERS

How can a rollover affect my taxes?

You will be taxed on a payment from the Plan if you do not roll it over. If you are
under age 59½ and do not do a rollover, you will also have to pay a 10%
additional income tax on early distributions (generally, distributions made before
age 59½), unless an exception applies. However, if you do a rollover, you will
not have to pay tax until you receive payments later and the 10% additional
income tax will not apply if those payments are made after you are age 59½ (or if
an exception applies).

What types of retirement accounts and plans may accept my rollover?

You may roll over the payment to either an IRA (an individual retirement account
or individual retirement annuity) or an employer plan (a tax-qualified plan, section
403(b) plan, or governmental section 457(b) plan) that will accept the rollover.
The rules of the IRA or employer plan that holds the rollover will determine your
investment options, fees, and rights to payment from the IRA or employer plan
(for example, no spousal consent rules apply to IRAs and IRAs may not provide
loans). Further, the amount rolled over will become subject to the tax rules that
apply to the IRA or employer plan.

How do I do a rollover?

There are two ways to do a rollover. You can do either a direct rollover or a 60-
day rollover.

If you do a direct rollover, the Plan will make the payment directly to your IRA or
an employer plan. You should contact the IRA sponsor or the administrator of
the employer plan for information on how to do a direct rollover.

If you do not do a direct rollover, you may still do a rollover by making a deposit
into an IRA or eligible employer plan that will accept it. Generally, you will have
60 days after you receive the payment to make the deposit. If you do not do a
direct rollover, the Plan is required to withhold 20% of the payment for federal
income taxes (up to the amount of cash and property received other than
employer stock). This means that, in order to roll over the entire payment in a
60-day rollover, you must use other funds to make up for the 20% withheld. If
you do not roll over the entire amount of the payment, the portion not rolled over
will be taxed and will be subject to the 10% additional income tax on early
distributions if you are under age 59½ (unless an exception applies).

How much may I roll over?

If you wish to do a rollover, you may roll over all or part of the amount eligible for
rollover. Any payment from the Plan is eligible for rollover, except:

• Certain payments spread over a period of at least 10 years or over your
life or life expectancy (or the lives or joint life expectancy of you and your
beneficiary);
• Required minimum distributions after age 70½ (or after death);
• Hardship distributions;
• ESOP dividends;
• Corrective distributions of contributions that exceed tax law limitations;
• Loans treated as deemed distributions (for example, loans in default due
to missed payments before your employment ends);
• Cost of life insurance paid by the Plan;
• Payments of certain automatic enrollment contributions requested to be
withdrawn within 90 days of the first contribution; and
• Amounts treated as distributed because of a prohibited allocation of
S corporation stock under an ESOP (also, there will generally be adverse
tax consequences if you roll over a distribution of S corporation stock to an
IRA).

The Plan administrator or the payor can tell you what portion of a payment is
eligible for rollover.

If I don’t do a rollover, will I have to pay the 10% additional income tax on
early distributions?

If you are under age 59½, you will have to pay the 10% additional income tax on
early distributions for any payment from the Plan (including amounts withheld for
income tax) that you do not roll over, unless one of the exceptions listed below
applies. This tax applies to the part of the distribution that you must include in
income and is in addition to the regular income tax on the payment not rolled
over.

The 10% additional income tax does not apply to the following payments from the
Plan:

• Payments made after you separate from service if you will be at least age
55 in the year of the separation;
• Payments that start after you separate from service if paid at least
annually in equal or close to equal amounts over your life or life
expectancy (or the lives or joint life expectancy of you and your
beneficiary);
• Payments from a governmental plan made after you separate from service
if you are a qualified public safety employee and you will be at least age
50 in the year of the separation;
• Payments made due to disability;
• Payments after your death;
• Payments of ESOP dividends;
• Corrective distributions of contributions that exceed tax law limitations;
• Cost of life insurance paid by the Plan;
• Payments made directly to the government to satisfy a federal tax levy;
• Payments made under a qualified domestic relations order (QDRO);
• Payments up to the amount of your deductible medical expenses (without
regard to whether you itemize deductions for the taxable year);
• Certain payments made while you are on active duty if you were a
member of a reserve component called to duty after September 11, 2001
for more than 179 days;
• Payments of certain automatic enrollment contributions requested to be
withdrawn within 90 days of the first contribution;
• Payments for certain distributions relating to certain federally declared
disasters; and
• Phased retirement payments made to federal employees.
If I do a rollover to an IRA, will the 10% additional income tax apply to early
distributions from the IRA?

If you receive a payment from an IRA when you are under age 59½, you will
have to pay the 10% additional income tax on early distributions on the part of
the distribution that you must include in income, unless an exception applies. In

general, the exceptions to the 10% additional income tax for early distributions
from an IRA are the same as the exceptions listed above for early distributions
from a plan. However, there are a few differences for payments from an IRA,
including:

• The exception for payments made after you separate from service if you
will be at least age 55 in the year of the separation (or age 50 for qualified
public safety employees) does not apply.
• The exception for qualified domestic relations orders (QDROs) does not
apply (although a special rule applies under which, as part of a divorce or
separation agreement, a tax-free transfer may be made directly to an IRA
of a spouse or former spouse).
• The exception for payments made at least annually in equal or close to
equal amounts over a specified period applies without regard to whether
you have had a separation from service.
• There are additional exceptions for (1) payments for qualified higher
education expenses, (2) payments up to $10,000 used in a qualified first-
time home purchase, and (3) payments for health insurance premiums
after you have received unemployment compensation for 12 consecutive
weeks (or would have been eligible to receive unemployment
compensation but for self-employed status).

Will I owe State income taxes?

This notice does not describe any State or local income tax rules (including
withholding rules).

SPECIAL RULES AND OPTIONS

If your payment includes after-tax contributions

After-tax contributions included in a payment are not taxed. If a payment is only
part of your benefit, an allocable portion of your after-tax contributions is included
in the payment, so you cannot take a payment of only after-tax contributions.
However, if you have pre-1987 after-tax contributions maintained in a separate
account, a special rule may apply to determine whether the after-tax
contributions are included in a payment. In addition, special rules apply when
you do a rollover, as described below.

You may roll over to an IRA a payment that includes after-tax contributions
through either a direct rollover or a 60-day rollover. You must keep track of the
aggregate amount of the after-tax contributions in all of your IRAs (in order to
determine your taxable income for later payments from the IRAs). If you do a
direct rollover of only a portion of the amount paid from the Plan and at the same
time the rest is paid to you, the portion directly rolled over consists first of the
amount that would be taxable if not rolled over. For example, assume you are

receiving a distribution of $12,000, of which $2,000 is after-tax contributions. In
this case, if you directly roll over $10,000 to an IRA that is not a Roth IRA, no
amount is taxable because the $2,000 amount not directly rolled over is treated
as being after-tax contributions. If you do a direct rollover of the entire amount
paid from the Plan to two or more destinations at the same time, you can choose
which destination receives the after-tax contributions.

If you do a 60-day rollover to an IRA of only a portion of a payment made to you,
the after-tax contributions are treated as rolled over last. For example, assume
you are receiving a distribution of $12,000, of which $2,000 is after-tax
contributions, and no part of the distribution is directly rolled over. In this case, if
you roll over $10,000 to an IRA that is not a Roth IRA in a 60-day rollover, no
amount is taxable because the $2,000 amount not rolled over is treated as being
after-tax contributions.

You may roll over to an employer plan all of a payment that includes after-tax
contributions, but only through a direct rollover (and only if the receiving plan
separately accounts for after-tax contributions and is not a governmental
section 457(b) plan). You can do a 60-day rollover to an employer plan of part of
a payment that includes after-tax contributions, but only up to the amount of the
payment that would be taxable if not rolled over.

If you miss the 60-day rollover deadline

Generally, the 60-day rollover deadline cannot be extended. However, the IRS
has the limited authority to waive the deadline under certain extraordinary
circumstances, such as when external events prevented you from completing the
rollover by the 60-day rollover deadline. Under certain circumstances, you may
claim eligibility for a waiver of the 60-day rollover deadline by making a written
self-certification. Otherwise, to apply for a waiver from the IRS, you must file a
private letter ruling request with the IRS. Private letter ruling requests require the
payment of a nonrefundable user fee. For more information, see IRS Publication
590-A, Contributions to Individual Retirement Arrangements (IRAs).

If your payment includes employer stock that you do not roll over

If you do not do a rollover, you can apply a special rule to payments of employer
stock (or other employer securities) that are either attributable to after-tax
contributions or paid in a lump sum after separation from service (or after age
59½, disability, or the participant’s death). Under the special rule, the net
unrealized appreciation on the stock will not be taxed when distributed from the
Plan and will be taxed at capital gain rates when you sell the stock. Net
unrealized appreciation is generally the increase in the value of employer stock
after it was acquired by the Plan. If you do a rollover for a payment that includes
employer stock (for example, by selling the stock and rolling over the proceeds
within 60 days of the payment), the special rule relating to the distributed

employer stock will not apply to any subsequent payments from the IRA or
employer plan. The Plan administrator can tell you the amount of any net
unrealized appreciation.

If you have an outstanding loan that is being offset

If you have an outstanding loan from the Plan, your Plan benefit may be offset by
the outstanding amount of the loan, typically when your employment ends. The
offset amount is treated as a distribution to you at the time of the offset.
Generally, you may roll over all or any portion of the offset amount. Any offset
amount that is not rolled over will be taxed (including the 10% additional income
tax on early distributions, unless an exception applies). You may roll over offset
amounts to an IRA or an employer plan (if the terms of the employer plan permit
the plan to receive plan loan offset rollovers).

How long you have to complete the rollover depends on what kind of plan loan
offset you have. If you have a qualified plan loan offset, you will have until your
tax return due date (including extensions) for the tax year during which the offset
occurs to complete your rollover. A qualified plan loan offset occurs when a plan
loan in good standing is offset because your employer plan terminates, or
because you sever from employment. If your plan loan offset occurs for any
other reason, then you have 60 days from the date the offset occurs to complete
your rollover.

If you were born on or before January 1, 1936

If you were born on or before January 1, 1936 and receive a lump sum
distribution that you do not roll over, special rules for calculating the amount of
the tax on the payment might apply to you. For more information, see IRS
Publication 575, Pension and Annuity Income.

If your payment is from a governmental section 457(b) plan

If the Plan is a governmental section 457(b) plan, the same rules described
elsewhere in this notice generally apply, allowing you to roll over the payment to
an IRA or an employer plan that accepts rollovers. One difference is that, if you
do not do a rollover, you will not have to pay the 10% additional income tax on
early distributions from the Plan even if you are under age 59½ (unless the
payment is from a separate account holding rollover contributions that were
made to the Plan from a tax-qualified plan, a section 403(b) plan, or an IRA).
However, if you do a rollover to an IRA or to an employer plan that is not a
governmental section 457(b) plan, a later distribution made before age 59½ will
be subject to the 10% additional income tax on early distributions (unless an
exception applies). Other differences include that you cannot do a rollover if the
payment is due to an “unforeseeable emergency” and the special rules under “If

your payment includes employer stock that you do not roll over” and “If you were
born on or before January 1, 1936” do not apply.

If you are an eligible retired public safety officer and your payment is used
to pay for health coverage or qualified long-term care insurance

If the Plan is a governmental plan, you retired as a public safety officer, and your
retirement was by reason of disability or was after normal retirement age, you
can exclude from your taxable income Plan payments paid directly as premiums
to an accident or health plan (or a qualified long-term care insurance contract)
that your employer maintains for you, your spouse, or your dependents, up to a
maximum of $3,000 annually. For this purpose, a public safety officer is a law
enforcement officer, firefighter, chaplain, or member of a rescue squad or
ambulance crew.

If you roll over your payment to a Roth IRA

If you roll over a payment from the Plan to a Roth IRA, a special rule applies
under which the amount of the payment rolled over (reduced by any after-tax
amounts) will be taxed. However, the 10% additional income tax on early
distributions will not apply (unless you take the amount rolled over out of the Roth
IRA within 5 years, counting from January 1 of the year of the rollover).

If you roll over the payment to a Roth IRA, later payments from the Roth IRA that
are qualified distributions will not be taxed (including earnings after the rollover).
A qualified distribution from a Roth IRA is a payment made after you are age
59½ (or after your death or disability, or as a qualified first-time homebuyer
distribution of up to $10,000) and after you have had a Roth IRA for at least 5
years. In applying this 5-year rule, you count from January 1 of the year for
which your first contribution was made to a Roth IRA. Payments from the Roth
IRA that are not qualified distributions will be taxed to the extent of earnings after
the rollover, including the 10% additional income tax on early distributions
(unless an exception applies). You do not have to take required minimum
distributions from a Roth IRA during your lifetime. For more information, see IRS
Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs),
and IRS Publication 590-B, Distributions from Individual Retirement
Arrangements (IRAs).

If you do a rollover to a designated Roth account in the Plan

You cannot roll over a distribution to a designated Roth account in another
employer’s plan. However, you can roll the distribution over into a designated
Roth account in the distributing Plan. If you roll over a payment from the Plan to
a designated Roth account in the Plan, the amount of the payment rolled over
(reduced by any after-tax amounts directly rolled over) will be taxed. However,
the 10% additional tax on early distributions will not apply (unless you take the

amount rolled over out of the designated Roth account within the 5-year period
that begins on January 1 of the year of the rollover).

If you roll over the payment to a designated Roth account in the Plan, later
payments from the designated Roth account that are qualified distributions will
not be taxed (including earnings after the rollover). A qualified distribution from a
designated Roth account is a payment made both after you are age 59½ (or after
your death or disability) and after you have had a designated Roth account in the
Plan for at least 5 years. In applying this 5-year rule, you count from January 1
of the year your first contribution was made to the designated Roth account.
However, if you made a direct rollover to a designated Roth account in the Plan
from a designated Roth account in a plan of another employer, the 5-year period
begins on January 1 of the year you made the first contribution to the designated
Roth account in the Plan or, if earlier, to the designated Roth account in the plan
of the other employer. Payments from the designated Roth account that are not
qualified distributions will be taxed to the extent of earnings after the rollover,
including the 10% additional income tax on early distributions (unless an
exception applies).

If you are not a Plan participant

Payments after death of the participant. If you receive a distribution after the
participant’s death that you do not roll over, the distribution will generally be
taxed in the same manner described elsewhere in this notice. However, the 10%
additional income tax on early distributions and the special rules for public safety
officers do not apply, and the special rule described under the section “If you
were born on or before January 1, 1936” applies only if the participant was born
on or before January 1, 1936.

If you are a surviving spouse. If you receive a payment from the Plan
as the surviving spouse of a deceased participant, you have the same
rollover options that the participant would have had, as described
elsewhere in this notice. In addition, if you choose to do a rollover to an
IRA, you may treat the IRA as your own or as an inherited IRA.

An IRA you treat as your own is treated like any other IRA of yours, so that
payments made to you before you are age 59½ will be subject to the 10%
additional income tax on early distributions (unless an exception applies)
and required minimum distributions from your IRA do not have to start until
after you are age 70½.

If you treat the IRA as an inherited IRA, payments from the IRA will not be
subject to the 10% additional income tax on early distributions. However,
if the participant had started taking required minimum distributions, you
will have to receive required minimum distributions from the inherited IRA.
If the participant had not started taking required minimum distributions

from the Plan, you will not have to start receiving required minimum
distributions from the inherited IRA until the year the participant would
have been age 70½.

If you are a surviving beneficiary other than a spouse. If you receive a
payment from the Plan because of the participant’s death and you are a
designated beneficiary other than a surviving spouse, the only rollover
option you have is to do a direct rollover to an inherited IRA. Payments
from the inherited IRA will not be subject to the 10% additional income tax
on early distributions. You will have to receive required minimum
distributions from the inherited IRA.

Payments under a qualified domestic relations order. If you are the spouse or
former spouse of the participant who receives a payment from the Plan under a
qualified domestic relations order (QDRO), you generally have the same options
and the same tax treatment that the participant would have (for example, you
may roll over the payment to your own IRA or an eligible employer plan that will
accept it). However, payments under the QDRO will not be subject to the 10%
additional income tax on early distributions.

If you are a nonresident alien

If you are a nonresident alien and you do not do a direct rollover to a U.S. IRA or
U.S. employer plan, instead of withholding 20%, the Plan is generally required to
withhold 30% of the payment for federal income taxes. If the amount withheld
exceeds the amount of tax you owe (as may happen if you do a 60-day rollover),
you may request an income tax refund by filing Form 1040NR and attaching your
Form 1042-S. See Form W-8BEN for claiming that you are entitled to a reduced
rate of withholding under an income tax treaty. For more information, see also
IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515,
Withholding of Tax on Nonresident Aliens and Foreign Entities.

Other special rules

If a payment is one in a series of payments for less than 10 years, your choice
whether to make a direct rollover will apply to all later payments in the series
(unless you make a different choice for later payments).

If your payments for the year are less than $200 (not including payments from a
designated Roth account in the Plan), the Plan is not required to allow you to do
a direct rollover and is not required to withhold federal income taxes. However,
you may do a 60-day rollover.

Unless you elect otherwise, a mandatory cashout of more than $1,000 (not
including payments from a designated Roth account in the Plan) will be directly
rolled over to an IRA chosen by the Plan administrator or the payor. A

mandatory cashout is a payment from a plan to a participant made before age 62
(or normal retirement age, if later) and without consent, where the participant’s
benefit does not exceed $5,000 (not including any amounts held under the plan
as a result of a prior rollover made to the plan).

You may have special rollover rights if you recently served in the U.S. Armed
Forces. For more information on special rollover rights related to the U.S. Armed
Forces, see IRS Publication 3, Armed Forces’ Tax Guide. You also may have
special rollover rights if you were affected by a federally declared disaster (or
similar event), or if you received a distribution on account of a disaster. For more
information on special rollover rights related to disaster relief, see the IRS
website at www.irs.gov
.

FOR MORE INFORMATION

You may wish to consult with the Plan administrator or payor, or a professional
tax advisor, before taking a payment from the Plan. Also, you can find more
detailed information on the federal tax treatment of payments from employer
plans in: IRS Publication 575, Pension and Annuity Income; IRS Publication
590-A, Contributions to Individual Retirement Arrangements (IRAs); IRS
Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs);
and IRS Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). These
publications are available from a local IRS office, on the web at www.irs.gov, or
by calling 1-800-TAX-FORM.

For Payments From a
Designated Roth Account

YOUR ROLLOVER OPTIONS

You are receiving this notice because all or a portion of a payment you are
receiving from the [INSERT NAME OF PLAN] (the “Plan”) is eligible to be rolled
over to a Roth IRA or designated Roth account in an employer plan. This notice
is intended to help you decide whether to do a rollover.

This notice describes the rollover rules that apply to payments from the Plan that
are from a designated Roth account. If you also receive a payment from the Plan
that is not from a designated Roth account, you will be provided a different notice
for that payment, and the Plan administrator or the payor will tell you the amount
that is being paid from each account.

Rules that apply to most payments from a designated Roth account are
described in the “General Information About Rollovers” section. Special rules
that only apply in certain circumstances are described in the “Special Rules and
Options” section.

GENERAL INFORMATION ABOUT ROLLOVERS

How can a rollover affect my taxes?

After-tax contributions included in a payment from a designated Roth account are
not taxed, but earnings might be taxed. The tax treatment of earnings included in
the payment depends on whether the payment is a qualified distribution. If a
payment is only part of your designated Roth account, the payment will include
an allocable portion of the earnings in your designated Roth account.

If the payment from the Plan is not a qualified distribution and you do not do a
rollover to a Roth IRA or a designated Roth account in an employer plan, you will
be taxed on the earnings in the payment. If you are under age 59½, a 10%
additional income tax on early distributions (generally, distributions made before
age 59½) will also apply to the earnings (unless an exception applies). However,
if you do a rollover, you will not have to pay taxes currently on the earnings and
you will not have to pay taxes later on payments that are qualified distributions.

If the payment from the Plan is a qualified distribution, you will not be taxed on
any part of the payment even if you do not do a rollover. If you do a rollover, you
will not be taxed on the amount you roll over and any earnings on the amount
you roll over will not be taxed if paid later in a qualified distribution.

A qualified distribution from a designated Roth account in the Plan is a payment
made after you are age 59½ (or after your death or disability) and after you have

had a designated Roth account in the Plan for at least 5 years. In applying the 5-
year rule, you count from January 1 of the year your first contribution was made
to the designated Roth account. However, if you did a direct rollover to a
designated Roth account in the Plan from a designated Roth account in another
employer plan, your participation will count from January 1 of the year your first
contribution was made to the designated Roth account in the Plan or, if earlier, to
the designated Roth account in the other employer plan.

What types of retirement accounts and plans may accept my rollover?

You may roll over the payment to either a Roth IRA (a Roth individual retirement
account or Roth individual retirement annuity) or a designated Roth account in an
employer plan (a tax-qualified plan, section 403(b) plan, or governmental section
457 plan) that will accept the rollover. The rules of the Roth IRA or employer
plan that holds the rollover will determine your investment options, fees, and
rights to payment from the Roth IRA or employer plan (for example, no spousal
consent rules apply to Roth IRAs and Roth IRAs may not provide loans).
Further, the amount rolled over will become subject to the tax rules that apply to
the Roth IRA or the designated Roth account in the employer plan. In general,
these tax rules are similar to those described elsewhere in this notice, but
differences include:

• If you do a rollover to a Roth IRA, all of your Roth IRAs will be considered
for purposes of determining whether you have satisfied the 5-year rule
(counting from January 1 of the year for which your first contribution was
made to any of your Roth IRAs).
• If you do a rollover to a Roth IRA, you will not be required to take a
distribution from the Roth IRA during your lifetime and you must keep
track of the aggregate amount of the after-tax contributions in all of your
Roth IRAs (in order to determine your taxable income for later Roth IRA
payments that are not qualified distributions).
• Eligible rollover distributions from a Roth IRA can only be rolled over to
another Roth IRA.

How do I do a rollover?

There are two ways to do a rollover. You can either do a direct rollover or a 60-
day rollover.

If you do a direct rollover, the Plan will make the payment directly to your Roth
IRA or designated Roth account in an employer plan. You should contact the
Roth IRA sponsor or the administrator of the employer plan for information on
how to do a direct rollover.

If you do not do a direct rollover, you may still do a rollover by making a deposit
(generally within 60 days) into a Roth IRA, whether the payment is a qualified or

nonqualified distribution. In addition, you can do a rollover by making a deposit
within 60 days into a designated Roth account in an employer plan if the payment
is a nonqualified distribution and the rollover does not exceed the amount of the
earnings in the payment. You cannot do a 60-day rollover to an employer plan of
any part of a qualified distribution. If you receive a distribution that is a
nonqualified distribution and you do not roll over an amount at least equal to the
earnings allocable to the distribution, you will be taxed on the amount of those
earnings not rolled over, including the 10% additional income tax on early
distributions if you are under age 59½ (unless an exception applies).

If you do a direct rollover of only a portion of the amount paid from the Plan and a
portion is paid to you at the same time, the portion directly rolled over consists
first of earnings.

If you do not do a direct rollover and the payment is not a qualified distribution,
the Plan is required to withhold 20% of the earnings for federal income taxes (up
to the amount of cash and property received other than employer stock). This
means that, in order to roll over the entire payment in a 60-day rollover to a Roth
IRA, you must use other funds to make up for the 20% withheld.

How much may I roll over?

If you wish to do a rollover, you may roll over all or part of the amount eligible for
rollover. Any payment from the Plan is eligible for rollover, except:

The Plan administrator or the payor can tell you what portion of a payment is
eligible for rollover.

If I don’t do a rollover, will I have to pay the 10% additional income tax on
early distributions?

If a payment is not a qualified distribution and you are under age 59½, you will
have to pay the 10% additional income tax on early distributions with respect to
the earnings allocated to the payment that you do not roll over (including
amounts withheld for income tax), unless one of the exceptions listed below
applies. This tax is in addition to the regular income tax on the earnings not
rolled over.

The 10% additional income tax does not apply to the following payments from the
Plan:

• Payments made after you separate from service if you will be at least age
55 in the year of the separation;
• Payments that start after you separate from service if paid at least
annually in equal or close to equal amounts over your life or life
expectancy (or the lives or joint life expectancy of you and your
beneficiary);
• Payments from a governmental plan made after you separate from service
if you are a qualified public safety employee and you will be at least age
50 in the year of the separation;
• Payments made due to disability;
• Payments after your death;
• Payments of ESOP dividends ;
• Corrective distributions of contributions that exceed tax law limitations;
• Cost of life insurance paid by the Plan;
• Payments made directly to the government to satisfy a federal tax levy;
• Payments made under a qualified domestic relations order (QDRO);
• Payments up to the amount of your deductible medical expenses (without
regard to whether you itemize deductions for the taxable year);
• Certain payments made while you are on active duty if you were a
member of a reserve component called to duty after September 11, 2001
for more than 179 days;
• Payments of certain automatic enrollment contributions requested to be
withdrawn within 90 days of the first contribution; and
• Payments for certain distributions relating to certain federally declared
disasters.
If I do a rollover to a Roth IRA, will the 10% additional income tax apply to
early distributions from the IRA?

If you receive a payment from a Roth IRA when you are under age 59½, you will
have to pay the 10% additional income tax on early distributions on the earnings
paid from the Roth IRA, unless an exception applies or the payment is a qualified
distribution. In general, the exceptions to the 10% additional income tax for early

distributions from a Roth IRA listed above are the same as the exceptions for
early distributions from a plan. However, there are a few differences for
payments from a Roth IRA, including:

• The exception for payments made after you separate from service if you
will be at least age 55 in the year of the separation (or age 50 for qualified
public safety employees) does not apply.
• The exception for qualified domestic relations orders (QDROs) does not
apply (although a special rule applies under which, as part of a divorce or
separation agreement, a tax-free transfer may be made directly to a Roth
IRA of a spouse or former spouse).
• The exception for payments made at least annually in equal or close to
equal amounts over a specified period applies without regard to whether
you have had a separation from service.
• There are additional exceptions for (1) payments for qualified higher
education expenses, (2) payments up to $10,000 used in a qualified first-
time home purchase, and (3) payments for health insurance premiums
after you have received unemployment compensation for 12 consecutive
weeks (or would have been eligible to receive unemployment
compensation but for self-employed status).

Will I owe State income taxes?

This notice does not describe any State or local income tax rules (including
withholding rules).

SPECIAL RULES AND OPTIONS

If you miss the 60-day rollover deadline

If your payment includes employer stock that you do not roll over

If you receive a payment that is not a qualified distribution and you do not roll it
over, you can apply a special rule to payments of employer stock (or other
employer securities) that are paid in a lump sum after separation from service (or
after age 59½, disability, or the participant’s death). Under the special rule, the

net unrealized appreciation on the stock included in the earnings in the payment
will not be taxed when distributed to you from the Plan and will be taxed at capital
gain rates when you sell the stock. If you do a rollover to a Roth IRA for a
nonqualified distribution that includes employer stock (for example, by selling the
stock and rolling over the proceeds within 60 days of the distribution), you will not
have any taxable income and the special rule relating to the distributed employer
stock will not apply to any subsequent payments from the Roth IRA or employer
plan. Net unrealized appreciation is generally the increase in the value of the
employer stock after it was acquired by the Plan. The Plan administrator can tell
you the amount of any net unrealized appreciation.

If you receive a payment that is a qualified distribution that includes employer
stock and you do not roll it over, your basis in the stock (used to determine gain
or loss when you later sell the stock) will equal the fair market value of the stock
at the time of the payment from the Plan.

If you have an outstanding loan that is being offset

If you have an outstanding loan from the Plan, your Plan benefit may be offset by
the outstanding amount of the loan, typically when your employment ends. The
offset amount is treated as a distribution to you at the time of the offset.
Generally, you may roll over all or any portion of the offset amount. If the
distribution attributable to the offset is not a qualified distribution and you do not
roll over the offset amount, you will be taxed on any earnings included in the
distribution (including the 10% additional income tax on early distributions, unless
an exception applies). You may roll over the earnings included in the loan offset
to a Roth IRA or designated Roth account in an employer plan (if the terms of the
employer plan permit the plan to receive plan loan offset rollovers). You may
also roll over the full amount of the offset to a Roth IRA.

If you receive a nonqualified distribution and you were born on or before
January 1, 1936

If you were born on or before January 1, 1936, and receive a lump sum
distribution that is not a qualified distribution and that you do not roll over, special
rules for calculating the amount of the tax on the earnings in the payment might

apply to you. For more information, see IRS Publication 575, Pension and
Annuity Income.

If your payment is from a governmental section 457(b) plan

If the Plan is a governmental section 457(b) plan, the same rules described
elsewhere in this notice generally apply, allowing you to roll over the payment to
an IRA or an employer plan that accepts rollovers. One difference is that, if you
receive a payment that is not a qualified distribution and you do not roll it over,
you will not have to pay the 10% additional income tax on early distributions with
respect to the earnings allocated to the payment that you do not roll over, even if
you are under age 59½ (unless the payment is from a separate account holding
rollover contributions that were made to the Plan from a tax-qualified plan, a
section 403(b) plan, or an IRA). However, if you do a rollover to an IRA or to an
employer plan that is not a governmental section 457(b) plan, a later distribution
that is not a qualified distribution made before age 59½ will be subject to the 10%
additional income tax on earnings allocated to the payment (unless an exception
applies). Other differences include that you cannot do a rollover if the payment is
due to an “unforeseeable emergency” and the special rules under “If your
payment includes employer stock that you do not roll over” and “If you were born
on or before January 1, 1936” do not apply.

If you receive a nonqualified distribution, are an eligible retired public
safety officer, and your payment is used to pay for health coverage or
qualified long-term care insurance

If the Plan is a governmental plan, you retired as a public safety officer, and your
retirement was by reason of disability or was after normal retirement age, you
can exclude from your taxable income nonqualified distributions paid directly as
premiums to an accident or health plan (or a qualified long-term care insurance
contract) that your employer maintains for you, your spouse, or your dependents,
up to a maximum of $3,000 annually. For this purpose, a public safety officer is a
law enforcement officer, firefighter, chaplain, or member of a rescue squad or
ambulance crew.

If you are not a Plan participant

Payments after death of the participant. If you receive a distribution after the
participant’s death that you do not roll over, the distribution will generally be
taxed in the same manner described elsewhere in this notice. However, whether
the payment is a qualified distribution generally depends on when the participant
first made a contribution to the designated Roth account in the Plan. Also, the
10% additional income tax on early distributions and the special rules for public
safety officers do not apply, and the special rule described under the section “If
you receive a nonqualified distribution and you were born on or before

January 1, 1936” applies only if the participant was born on or before
January 1, 1936.

If you are a surviving spouse. If you receive a payment from the Plan
as the surviving spouse of a deceased participant, you have the same
rollover options that the participant would have had, as described
elsewhere in this notice. In addition, if you choose to do a rollover to a
Roth IRA, you may treat the Roth IRA as your own or as an inherited Roth
IRA.

A Roth IRA you treat as your own is treated like any other Roth IRA of
yours, so that you will not have to receive any required minimum
distributions during your lifetime and earnings paid to you in a nonqualified
distribution before you are age 59½ will be subject to the 10% additional
income tax on early distributions (unless an exception applies).

If you treat the Roth IRA as an inherited Roth IRA, payments from the
Roth IRA will not be subject to the 10% additional income tax on early
distributions. An inherited Roth IRA is subject to required minimum
distributions. If the participant had started taking required minimum
distributions from the Plan, you will have to receive required minimum
distributions from the inherited Roth IRA. If the participant had not started
taking required minimum distributions, you will not have to start receiving
required minimum distributions from the inherited Roth IRA until the year
the participant would have been age 70½.

If you are a surviving beneficiary other than a spouse. If you receive a
payment from the Plan because of the participant’s death and you are a
designated beneficiary other than a surviving spouse, the only rollover
option you have is to do a direct rollover to an inherited Roth IRA.
Payments from the inherited Roth IRA, even if made in a nonqualified
distribution, will not be subject to the 10% additional income tax on early
distributions. You will have to receive required minimum distributions from
the inherited Roth IRA.

Payments under a qualified domestic relations order. If you are the spouse or a
former spouse of the participant who receives a payment from the Plan under a
qualified domestic relations order (QDRO), you generally have the same options
and the same tax treatment that the participant would have (for example, you
may roll over the payment as described in this notice).

If you are a nonresident alien

exceeds the amount of tax you owe (as may happen if you do a 60-day rollover),
you may request an income tax refund by filing Form 1040NR and attaching your
Form 1042-S. See Form W-8BEN for claiming that you are entitled to a reduced
rate of withholding under an income tax treaty. For more information, see also
IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515,
Withholding of Tax on Nonresident Aliens and Foreign Entities.

Other special rules

If your payments for the year (only including payments from the designated Roth
account in the Plan) are less than $200, the Plan is not required to allow you to
do a direct rollover and is not required to withhold federal income taxes.
However, you can do a 60-day rollover.

Unless you elect otherwise, a mandatory cashout from the designated Roth
account in the Plan of more than $1,000 will be directly rolled over to a Roth IRA
chosen by the Plan administrator or the payor. A mandatory cashout is a
payment from a plan to a participant made before age 62 (or normal retirement
age, if later) and without consent, where the participant’s benefit does not exceed
$5,000 (not including any amounts held under the plan as a result of a prior
rollover made to the plan).

FOR MORE INFORMATION

Appendix B

Some plan administrators that have been using the safe harbor
explanations in Notice 2014-74 may wish to update those explanations by
making amendments to them (rather than by simply replacing them with the
revised safe harbor explanations in Appendix A). This appendix provides
instructions on how to amend the safe harbor explanations in Notice 2014-74 to
reflect the modifications made in the revised safe harbor explanations in
Appendix A. Part 1 contains amendments to the safe harbor explanation for
payments not from a designated Roth account and Part 2 contains amendments
to the safe harbor explanation for payments from a designated Roth account.

Part 1 – Amendments to the Safe Harbor Explanation for Payments not from a
Designated Roth Account

1. Under the heading “How can a rollover affect my taxes?,” replace the
second sentence with the following:

If you are under age 59½ and do not do a rollover, you will also have to
pay a 10% additional income tax on early distributions (generally,
distributions made before age 59½), unless an exception applies.

2. Replace the heading “Where may I roll over the payment?” with the
following:

What types of retirement accounts and plans may accept my
rollover?

3. Under the heading “How do I do a rollover?,” replace the second sentence
of the third paragraph beginning “If you do not do a direct rollover” with the
following:

Generally, you will have 60 days after you receive the payment to
make the deposit.

4. Under the heading “How much may I roll over?,” add semicolons at the end
of the first 8 bullets, and the word “and” after the semicolon in the eighth
bullet.

5. Under the heading “If I don’t do a rollover, will I have to pay the 10%
additional income tax on early distributions?,” replace the second
sentence of the first paragraph with the following:

This tax applies to the part of the distribution that you must include
in income and is in addition to the regular income tax on the
payment not rolled over.

6. Under the heading “If I don’t do a rollover, will I have to pay the 10%
additional income tax on early distributions?,” replace the bullet list with
the following:

• Payments made after you separate from service if you will be at least
age 55 in the year of the separation;
• Payments that start after you separate from service if paid at least
annually in equal or close to equal amounts over your life or life
expectancy (or the lives or joint life expectancy of you and your
beneficiary);
• Payments from a governmental plan made after you separate from
service if you are a qualified public safety employee and you will be at
least age 50 in the year of the separation;
• Payments made due to disability;
• Payments after your death;
• Payments of ESOP dividends;
• Corrective distributions of contributions that exceed tax law limitations;
• Cost of life insurance paid by the Plan;
• Payments made directly to the government to satisfy a federal tax levy;
• Payments made under a qualified domestic relations order (QDRO);
• Payments up to the amount of your deductible medical expenses
(without regard to whether you itemize deductions for the taxable
year);
• Certain payments made while you are on active duty if you were a
member of a reserve component called to duty after September 11,
2001 for more than 179 days;
• Payments of certain automatic enrollment contributions requested to
be withdrawn within 90 days of the first contribution;
• Payments for certain distributions relating to certain federally declared
disasters; and
• Phased retirement payments made to federal employees.
7. Under the heading “If I do a rollover to an IRA, will the 10% additional
income tax apply to early distributions from the IRA?,” replace the first
sentence of the first paragraph with the following:

If you receive a payment from an IRA when you are under age
59½, you will have to pay the 10% additional income tax on early
distributions on the part of the distribution that you must include in
income, unless an exception applies.

8. Under the heading “If I do a rollover to an IRA, will the 10% additional
income tax apply to early distributions from the IRA?,” replace the first
bullet with the following:

The exception for payments made after you separate from service if
you will be at least age 55 in the year of the separation (or age 50
for qualified public safety employees) does not apply.

9. Under the heading, “If you miss the 60-day rollover deadline,” replace the
paragraph with the following:

Generally, the 60-day rollover deadline cannot be extended.
However, the IRS has the limited authority to waive the deadline
under certain extraordinary circumstances, such as when external
events prevented you from completing the rollover by the 60-day
rollover deadline. Under certain circumstances, you may claim
eligibility for a waiver of the 60-day rollover deadline by making a
written self-certification. Otherwise, to apply for a waiver from the
IRS, you must file a private letter ruling request with the IRS.
Private letter ruling requests require the payment of a
nonrefundable user fee. For more information, see IRS Publication
590-A, Contributions to Individual Retirement Arrangements (IRAs).

10. Under the heading, “If you have an outstanding loan that is being offset,”
replace the paragraph with the following two paragraphs:

If you have an outstanding loan from the Plan, your Plan benefit
may be offset by the outstanding amount of the loan, typically when
your employment ends. The offset amount is treated as a
distribution to you at the time of the offset. Generally, you may roll
over all or any portion of the offset amount. Any offset amount that
is not rolled over will be taxed (including the 10% additional income
tax on early distributions, unless an exception applies). You may
roll over offset amounts to an IRA or an employer plan (if the terms
of the employer plan permit the plan to receive plan loan offset
rollovers).

How long you have to complete the rollover depends on what kind
of plan loan offset you have. If you have a qualified plan loan
offset, you will have until your tax return due date (including
extensions) for the tax year during which the offset occurs to
complete your rollover. A qualified plan loan offset occurs when a
plan loan in good standing is offset because your employer plan
terminates, or because you sever from employment. If your plan
loan offset occurs for any other reason, then you have 60 days from
the date the offset occurs to complete your rollover.

11. Under the heading “If your payment is from a governmental section
457(b) plan,” replace the last sentence with the following:

Other differences include that you cannot do a rollover if the
payment is due to an “unforeseeable emergency” and the special
rules under “If your payment includes employer stock that you do
not roll over” and “If you were born on or before January 1, 1936”
do not apply.

12. Replace the heading “If you are an eligible retired public safety officer
and your pension payment is used to pay for health coverage or
qualified long-term care insurance” with the following:

If you are an eligible retired public safety officer and your
payment is used to pay for health coverage or qualified long-
term care insurance

13. Under the heading “If you are an eligible retired public safety officer and
your payment is used to pay for health coverage or qualified long-term
care insurance,” replace the first sentence with the following:

If the Plan is a governmental plan, you retired as a public safety
officer, and your retirement was by reason of disability or was after
normal retirement age, you can exclude from your taxable income
Plan payments paid directly as premiums to an accident or health
plan (or a qualified long-term care insurance contract) that your
employer maintains for you, your spouse, or your dependents, up to
a maximum of $3,000 annually.

14. Replace the heading “If you are not a plan participant” with the following:

If you are not a Plan participant

15. Replace the paragraph under the heading “Payments under a qualified
domestic relations order” with the following:

If you are the spouse or former spouse of the participant who
receives a payment from the Plan under a qualified domestic
relations order (QDRO), you generally have the same options and
the same tax treatment that the participant would have (for
example, you may roll over the payment to your own IRA or an
eligible employer plan that will accept it). However, payments
under the QDRO will not be subject to the 10% additional income
tax on early distributions.

16. Under the heading “Other special rules,” replace the first sentence of the
second paragraph with the following:

If your payments for the year are less than $200 (not including payments
from a designated Roth account in the Plan), the Plan is not required to
allow you to do a direct rollover and is not required to withhold federal
income taxes.

17. Under the heading “Other special rules,” replace the fourth paragraph with
the following:

You may have special rollover rights if you recently served in the
U.S. Armed Forces. For more information on special rollover rights
related to the U.S. Armed Forces, see IRS Publication 3, Armed
Forces’ Tax Guide. You also may have special rollover rights if you
were affected by a federally declared disaster (or similar event), or
if you received a distribution on account of a disaster. For more
information on special rollover rights related to disaster relief, see
the IRS website at www.irs.gov
.

Part 2 – Amendments to the Safe Harbor Explanation for Payments from a
Designated Roth Account

1. Under the heading “How can a rollover affect my taxes?,” replace the
second sentence of the second paragraph with the following:

If you are under age 59½, a 10% additional income tax on early
distributions (generally, distributions made before age 59½) will also apply
to the earnings (unless an exception applies).

2. Replace the heading “Where may I roll over the payment?” with the
following:

What types of retirement accounts and plans may accept my
rollover?

3. Under the heading “What types of retirement accounts and plans may
accept my rollover?,” replace the second parenthetical in the first sentence
with the following:

(a tax-qualified plan, section 403(b) plan, or governmental section
457 plan)

4. Under the heading “How do I do a rollover?,” replace the first sentence of
the third paragraph beginning “If you do not do a direct rollover” with the
following:

If you do not do a direct rollover, you may still do a rollover by
making a deposit (generally within 60 days) into a Roth IRA,
whether the payment is a qualified or nonqualified distribution.

5. Under the heading “How much may I roll over?,” add semicolons at the end
of the first eight bullets, and the word “and” after the semicolon in the eighth
bullet.

6. Under the heading “If I don’t do a rollover, will I have to pay the 10%
additional income tax on early distributions?,” replace the bullet list with
the following:

• Payments made after you separate from service if you will be at least
age 55 in the year of the separation;
• Payments that start after you separate from service if paid at least
annually in equal or close to equal amounts over your life or life
expectancy (or the lives or joint life expectancy of you and your
beneficiary);
• Payments from a governmental plan made after you separate from
service if you are a qualified public safety employee and you will be at
least age 50 in the year of the separation;
• Payments made due to disability;
• Payments after your death;
• Payments of ESOP dividends ;
• Corrective distributions of contributions that exceed tax law limitations;
• Cost of life insurance paid by the Plan;
• Payments made directly to the government to satisfy a federal tax levy;
• Payments made under a qualified domestic relations order (QDRO);
• Payments up to the amount of your deductible medical expenses
(without regard to whether you itemize deductions for the taxable
year);
• Certain payments made while you are on active duty if you were a
member of a reserve component called to duty after September 11,
2001 for more than 179 days;
• Payments of certain automatic enrollment contributions requested to
be withdrawn within 90 days of the first contribution; and
• Payments for certain distributions relating to certain federally declared
disasters.
7. Under the heading “If I do a rollover to a Roth IRA, will the 10% additional
income tax apply to early distributions from the IRA?,” replace the first
bullet with the following:

The exception for payments made after you separate from service if
you will be at least age 55 in the year of the separation (or age 50
for qualified public safety employees) does not apply.

8. Under the heading “If you miss the 60-day rollover deadline,” replace the
paragraph with the following:

Generally, the 60-day rollover deadline cannot be extended.
However, the IRS has the limited authority to waive the deadline
under certain extraordinary circumstances, such as when external
events prevented you from completing the rollover by the 60-day
rollover deadline. Under certain circumstances, you may claim
eligibility for a waiver of the 60-day rollover deadline by making a
written self-certification. Otherwise, to apply for a waiver from the
IRS, you must file a private letter ruling request with the IRS.
Private letter ruling requests require the payment of a
nonrefundable user fee. For more information, see IRS Publication
590-A, Contributions to Individual Retirement Arrangements (IRAs).

9. Under the heading “If you have an outstanding loan that is being offset,”
replace the paragraph with the following two paragraphs:

If you have an outstanding loan from the Plan, your Plan benefit
may be offset by the outstanding amount of the loan, typically when
your employment ends. The offset amount is treated as a
distribution to you at the time of the offset. Generally, you may roll
over all or any portion of the offset amount. If the distribution
attributable to the offset is not a qualified distribution and you do not
roll over the offset amount, you will be taxed on any earnings
included in the distribution (including the 10% additional income tax
on early distributions, unless an exception applies). You may roll
over the earnings included in the loan offset to a Roth IRA or
designated Roth account in an employer plan (if the terms of the
employer plan permit the plan to receive plan loan offset rollovers).
You may also roll over the full amount of the offset to a Roth IRA.

How long you have to complete the rollover depends on what kind
of plan loan offset you have. If you have a qualified plan loan
offset, you will have until your tax return due date (including
extensions) for the tax year during which the offset occurs to
complete your rollover. A qualified plan loan offset occurs when a
plan loan in good standing is offset because your employer plan
terminates, or because you sever from employment. If your plan
loan offset occurs for any other reason, then you have 60 days from
the date the offset occurs to complete your rollover.

10. Before the heading “If you receive a nonqualified distribution, are an
eligible retired public safety officer, and your pension payment is used

to pay for health coverage or qualified long-term care insurance,” add
the following new heading and paragraph:

If your payment is from a governmental section 457(b) plan

If the Plan is a governmental section 457(b) plan, the same rules
described elsewhere in this notice generally apply, allowing you to
roll over the payment to an IRA or an employer plan that accepts
rollovers. One difference is that, if you receive a payment that is
not a qualified distribution and you do not roll it over, you will not
have to pay the 10% additional income tax on early distributions
with respect to the earnings allocated to the payment that you do
not roll over, even if you are under age 59½ (unless the payment is
from a separate account holding rollover contributions that were
made to the Plan from a tax-qualified plan, a section 403(b) plan, or
an IRA). However, if you do a rollover to an IRA or to an employer
plan that is not a governmental section 457(b) plan, a later
distribution that is not a qualified distribution made before age 59½
will be subject to the 10% additional income tax on earnings
allocated to the payment (unless an exception applies). Other
differences include that you cannot do a rollover if the payment is
due to an “unforeseeable emergency” and the special rules under
“If your payment includes employer stock that you do not roll over”
and “If you were born on or before January 1, 1936” do not apply.

11. Replace the heading “If you receive a nonqualified distribution, are an
eligible retired public safety officer, and your pension payment is used
to pay for health coverage or qualified long-term care insurance” with the
following:

If you receive a nonqualified distribution, are an eligible retired
public safety officer, and your payment is used to pay for
health coverage or qualified long-term care insurance

12. Replace the heading “If you are not a plan participant” with the following:

If you are not a Plan participant

13. Replace the paragraph under the heading “Payments under a qualified
domestic relations order” with the following:

example, you may roll over the payment as described in this
notice).

14. Under the heading “Other special rules,” replace the first sentence of the
second paragraph with the following:

If your payments for the year (only including payments from the
designated Roth account in the Plan) are less than $200, the Plan is not
required to allow you to do a direct rollover and is not required to withhold
federal income taxes.

15. Under the heading “Other special rules,” replace the fourth paragraph with
the following:

You may have special rollover rights if you recently served in the
U.S. Armed Forces. For more information on special rollover rights
related to the U.S. Armed Forces, see IRS Publication 3, Armed
Forces’ Tax Guide. You also may have special rollover rights if you
were affected by a federally declared disaster (or similar event), or
if you received a distribution on account of a disaster. For more
information on special rollover rights related to disaster relief, see
the IRS website at www.irs.gov
.

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