402(f) Tax Notice Including Roth 401(k) Discussion?

[namealreadyinuse]

I know that the IRS safeharbor 402(f) notice is too old to include Roth 401(k) (among other things like non-spouse rollover). The IRS is going to revise it but it won't be soon enough for us unfortunately.

I also understand that the IRS position is employers must customize the new model for things such as Roth 401(k)s if it adopts them. I have never seen a revised version so I am not sure that this is really being done, but we need it done.

Does anyone have thoughts on how much to add (or can confirm that we even need to add) to the model to incorporate Roth 401(k)s (we did adopt them). Do other items like non-spouse rollovers need to be included (we may not have adopted plan amendments yet)?

Any checklists of necessary revisions or sample revisions would be greatly appreciated!!!

[J Simmons]

A QRP does not have to permit non-spouse rollovers, but may now. So if it's not yet in your QRP documents, you not only don't have to include discussion of it in your 402f notice, but you cannot permit that option--at least until you amend the QRP.

I think if you have 401k Roth option, then your 402f notice should include a statement, explaining that any Roth benefits would need to be rolled over into a Roth IRA separate and apart from a rollover IRA for the pre-tax benefits.

[Bird]

So if it's not yet in your QRP documents, you not only don't have to include discussion of it in your 402f notice, but you cannot permit that option--at least until you amend the QRP.

This is a little off-topic but I believe that's the kind of thing you can permit in operation now and amend before the end of the year.

As for the Roth language, we put this at the top of our notices:

Caution: Certain parts of this notice have become outdated and inaccurate due to recent changes in tax law. For instance, rollovers of Designated Roth 401(k) contributions to Roth IRAs and/or another qualified retirement plan may be permitted, and rollovers by non-spouse beneficiaries to inherited IRAs may be permitted. We are waiting for revised “safe harbor” language from the IRS; readers are urged to consult a tax advisor for assistance.

No it's not my proudest moment and I think I meant to change it by now, but I'm not losing sleep over it.

[namealreadyinuse]

Thanks Bird - that is a very helpful response. It will made me feel better about just doing a band-aid revision, which I am leaning towards (there is safety in numbers or misery loves company I guess if we all get busted).

Your "cautionary note" (aka, CYA note) uses the defined term "Designated Roth" does the existing notice include details about designated Roths:

- if the plan in your example adopted designated Roths, was the note all you discussed or was there more in the guts of the SPD?

- was the plan just pre-tax 401(k) only and your note just inteded to pick up general 402 rollover provisions that mentioned the term?

Thanks again!

[Bird]

Your "cautionary note" (aka, CYA note) uses the defined term "Designated Roth" does the existing notice include details about designated Roths:

- if the plan in your example adopted designated Roths, was the note all you discussed or was there more in the guts of the SPD?

- was the plan just pre-tax 401(k) only and your note just inteded to pick up general 402 rollover provisions that mentioned the term?

The CYA language is generic to all distributions, i.e. it's on there whether the plan allows Roth contributions or not. If a plan was amended to include Roth provisions we did an SMM.

[blue]

We got a new notice from our document provider. ASPPA had one on their website as well as Mckay Hochman.