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On August 12, 2026, the IRS issued Notice 2026-49, providing guidance “intended to simplify, standardize, facilitate, and expedite the completion of direct rollovers to or from a retirement plan.” The Notice generally outlines a 5-step plan-to-plan direct rollover process and provides a set of forms for it. Use of the new process is not (currently) mandatory, and the guidance does not provide a safe harbor, but IRS is considering, after receiving feedback, developing regulations that would be (in some respects) mandatory and would provide a safe harbor.
In this article, we briefly summarize the process outlined in the guidance and discuss further guidance IRS is considering.
SECURE 2.0 requires IRS to “develop and issue guidance, in the form of sample forms (including relevant procedures and protocols), to simplify, standardize, facilitate, and expedite the completion of rollovers to eligible retirement plans and trustee-to-trustee transfers from individual retirement plans.” Notice 2026-49 is responsive to that requirement.
The target of the guidance is the practice – authorized by current direct rollover regulations – of plans making direct rollovers by “[p]roviding the distributee with a check and instructing the distributee to deliver the check to the eligible retirement plan.” This practice “puts the onus on the participant to transmit the check to the receiving plan, and in the process, the check may be lost or misplaced. In addition, this indirect process can take significant time, during which a participant’s retirement account does not receive interest or dividends.”
A 2024 Government Accountability Office (GAO) report found that “nearly one-third of participants receive paper checks” pursuant to this practice.
The new guidance outlines a five-step process involving four “sample forms” pursuant to which a distributing plan may transfer/rollover a participant’s benefit to a receiving plan, by check or electronic transfer. Under this process, generally, all that a participant would have to do is submit an initial rollover request to the receiving plan using the IRS sample form for that purpose.
This process is not intended for use in IRA-to-IRA rollovers but “may be used for rollovers to or from an IRA.”
The guidance states that the forms “are designed to effectuate” certain “protocols”:
Encryption of data and use of a unique “rollover identification number (RIN)”
Coordination between plans “to minimize participants’ burden”
Use of standardized date
Verification prior to transfer
Use of electronic communications/transfers “to the maximum extent possible”
Where electronic transfer is not possible, the distributing plan should mail the participant’s check directly to the receiving plan.
Step 1:
The Participant submits a rollover request to the Receiving Plan using Form 1 (Participant’s Rollover Request), including an executed Participant’s Rollover Request Authorization.
Step 2:
The Receiving Plan submits the Participant’s rollover request to the Distributing Plan using Form 2 (Receiving Plan’s Request to Distributing Plan) with the Participant’s Rollover Request Authorization attached.
Step 3:
The Distributing Plan verifies the accuracy of the information on Form 1. Following verification, the Distributing Plan uses Form 3 (Distributing Plan’s Rollover Certification) to transmit information to the Receiving Plan about the Participant’s Distributing Plan account, including the possible rollover transfer methods.
Step 4:
The Receiving Plan verifies that it can receive the rollover. Following verification, the Receiving Plan uses Form 4 (Receiving Plan’s Rollover Acceptance) to accept the rollover and select one of the rollover transfer methods offered by the Distributing Plan.
Step 5:
The Distributing Plan transfers the rollover to the Receiving Plan using the selected rollover transfer method.
The four forms are available on the IRS website.
The new process outlined in the guidance is optional – so plans can still use the current process of giving the participant the check and making him or her physically transmit it to the receiving plan. And, the guidance explicitly states that “The Treasury Department and the IRS are not currently providing safe harbors based on the use of the sample forms and proposed rollover procedures.”
In the Notice, the IRS also identified several formal regulatory changes it was considering:
Removing current regulatory approval of the practices of allowing plans to send paper checks to the participant to complete a direct rollover.
Requiring administrators to process direct rollovers on a direct, plan-to-plan basis.
Providing a “safe harbors based on the use of sample forms similar to the sample forms [included in the Notice].”
Adding to the list of prohibited procedures currently included in the regulation prohibitions on “use of a Medallion Signature Guarantee or distribution letters and other burdensome requests” and on “prevent[ing] a participant from choosing to complete a rollover via electronic transfer to a receiving plan, assuming both plans have capability for such an electronic transfer.”
Comments are due on or before October 23, 2026.
We will continue to follow this issue.
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This is a publication of O3 Plan Advisory Services. If you have any comments, or have questions about regulatory developments, please contact your relationship manager or Mike Barry at mbarry@octoberthree.com.
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