On January 15th the IRS issued Notice 2026-13, which will be published in the Internal Revenue Bulletin (IRB) 2026-6 on February 2, 2026. This Notice replaces Notice 2020-62 and provides two model safe harbor explanations for retirement plans to satisfy Section 402(f) of the Internal Revenue Code.

Section 402(f) requires that plan administrators provide certain information to participants who are eligible for a rollover distribution. This is typically accomplished through the Special Tax Notice that accompanies participant commencement packages. Secure Act 2.0 modified some of the tax provisions and exemptions for eligible distributions. These new explanations reflect Secure Act 2.0 updates as well as some recommended updates from the US Government Accountability Office to improve participant communication.

The key changes are as follows:

1. The addition of a Contents section to help participants navigate to the sections that pertain to them.
2. Additional wording edits to provide guidance in straightforward, nontechnical language.
3. Updates regarding small lump sums (increased from $5,000 to $7,000).
4. Updates regarding required minimum distributions under Secure Act 2.0.
5. Updates for tax exemptions for public safety employees and private-sector firefighters.
6. Other Secure Act 2.0 updates for tax exemptions on distributions for qualifying events such as emergency expenses, domestic abuse, terminal illness, disaster recovery, and qualified long-term care.
7. Additional references to other IRS publications for further information.

Note that the IRS anticipates making additional updates for other Secure Act 2.0 changes which become effective in 2027.

Action needed:

Plan administrators need to review their Special Tax Notices now to verify compliance with the updated rules and regulations. Plan administrators are not required to use the model safe harbor explanations. However, they are required to provide participants with a written explanation of these key rules and utilizing the safe harbor explanations is an easy way to ensure compliance.

Please reach out to a Bolton consultant for assistance in updating and/or reviewing your participant communications.