Treasury and IRS Issue Guidance to Simplify Electronic Retirement Rollovers

The U.S. Department of the Treasury and Internal Revenue Service have issued new guidance intended to make it easier and safer for workers to move retirement savings between employer-sponsored plans and individual retirement accounts.

Notice 2026-49 introduces standardized sample forms and proposed procedures for direct rollovers involving retirement plans such as 401(k), 403(b) and governmental 457(b) plans, as well as IRAs. The guidance encourages financial institutions and retirement-plan administrators to complete rollovers electronically whenever possible, reducing their dependence on paper checks and inconsistent procedures.

Why the Rollover Process Is Changing

Workers often accumulate several retirement accounts as they change employers. Moving those savings into a new employer’s plan or an IRA can involve different forms, verification requirements and transfer procedures at each financial institution.

Government reviews have found that this lack of standardization can create confusion, delays and additional work for participants. Nearly one-third of surveyed rollover participants received paper checks that they were responsible for forwarding to the receiving plan, according to findings cited in the IRS notice.

Paper-based rollovers can also expose participants to lost or delayed checks and periods when their retirement funds are no longer invested.

The new guidance was issued under Section 324 of the SECURE 2.0 Act, which directed the Treasury Department to develop sample forms and protocols that simplify, standardize and accelerate retirement rollovers.

How the Proposed Process Works

The guidance outlines a five-step process:

1. The participant submits a rollover request to the retirement plan or IRA that will receive the money.

2. The receiving plan sends the authorized request to the plan currently holding the funds.

3. The distributing plan verifies the participant, account and rollover eligibility.

4. The receiving plan confirms that it can accept the rollover and selects an available transfer method.

5. The distributing plan transfers the funds directly to the receiving account.

The proposed process allows the receiving institution to coordinate much of the transaction, potentially reducing the participant’s role as an intermediary between two financial institutions.

Greater Use of Secure Electronic Transfers

Treasury and the IRS are encouraging plans to use electronic communications and electronic fund transfers whenever their systems permit.

The guidance calls for encrypted data transmission and a unique rollover identification number, or RIN, to identify each transaction while limiting the amount of personal information exchanged between institutions. Retirement providers may incorporate the sample procedures into online forms, application programming interfaces, clearinghouses or other secure electronic platforms. If an electronic transfer is unavailable, the distributing plan may issue a check payable to the receiving plan for the participant’s benefit. Under the proposed procedure, the check should be sent directly to the receiving plan rather than handed to the participant for delivery.

Use of the Forms Is Currently Optional

The new sample forms and procedures are not mandatory. Retirement-plan sponsors, administrators and IRA trustees may choose whether to use them. Treasury and the IRS are not currently providing a legal safe harbor solely because an institution follows the sample process. The agencies are considering future guidance that could require electronic transfers when both institutions have the necessary capability. They are also evaluating whether plans should be prohibited from imposing unnecessarily burdensome requirements, such as certain signature guarantees or additional distribution letters. Any future electronic-transfer mandate would include time for retirement providers to update their systems.

Which Rollovers Are Covered?

The guidance applies when money is moved; From one employer-sponsored retirement plan to another; From an employer plan to an IRA; or From an IRA into an employer plan that accepts incoming rollovers.

It does not cover IRA-to-IRA transfers, which are frequently completed through existing electronic account-transfer systems. The forms also do not eliminate other legal requirements. A participant may still need to satisfy plan rules involving eligibility for a distribution, spousal consent or required minimum distributions.

Why Direct Rollovers Can Be Beneficial

A direct rollover generally moves retirement funds from one trustee or plan administrator to another without the money being paid to the participant. When an eligible distribution from an employer plan is paid directly to an individual, the plan generally must withhold 20% for federal income taxes, even if the individual intends to complete a rollover later. The participant normally has 60 days to redeposit the full distribution—including the withheld amount—to preserve its tax-deferred status.

A properly completed direct rollover generally avoids that mandatory withholding and reduces the risk of missing the 60-day deadline. However, different tax rules can apply to Roth conversions and other specialized transactions.

Public Comments Accepted Through October

Treasury and the IRS are requesting feedback from retirement providers, employers, financial institutions, consumer organizations and other interested parties.

Comments on the forms, technology standards and proposed procedures are due by October 23, 2026. Instructions for submitting comments are included in Notice 2026-49. The agencies will review the feedback before deciding whether to issue additional requirements or legal safe harbors.

For retirement savers, the guidance represents a step toward a more consistent and secure system. The immediate availability of electronic rollover options will still depend on the procedures adopted by each employer plan and financial institution.