Omission of 30-day notice period in "Your Rollover Options" in Notice 2009-68

[Everett Moreland]

"Your Rollover Options" in Notice 2009-68 does not included the notice of the 30-day period that is required by the following 1.402(f)-1 A-2(a) to allow waiver of the 30-day period.

Following is the notice of the 30-day period in the Special Tax Notice in Notice 2002-3:

"Your Right to Waive the 30–Day Notice Period. Generally, neither a direct rollover nor a payment can be made from the plan until at least 30 days after your receipt of this notice. Thus, after receiving this notice, you have at least 30 days to consider whether or not to have your withdrawal directly rolled over. If you do not wish to wait until this 30-day notice period ends before your election is processed, you may waive the notice period by making an affirmative election indicating whether or not you wish to make a direct rollover. Your withdrawal will then be processed in accordance with your election as soon as practical after it is received by the Plan Administrator."

1.402(f)-1 A-2(a):

"(a) This paragraph (a) is satisfied if the plan administrator provides a distributee with the section 402(f) notice no less than 30 days and no more than 90 days before the date of a distribution. However, if the distributee, after having received the section 402(f) notice, affirmatively elects a distribution, a plan will not fail to satisfy section 402(f) merely because the distribution is made less than 30 days after the section 402(f) notice was provided to the distributee, provided the plan administrator clearly indicates to the distributee that the distributee has a right to consider the decision of whether or not to elect a direct rollover for at least 30 days after the notice is provided. The plan administrator may use any method to inform the distributee of the relevant time period, provided that the method is reasonably designed to attract the attention of the distributee. For example, this information could be either provided in the section 402(f) notice or stated in a separate document (e.g., attached to the election form) that is provided at the same time as the notice. For purposes of satisfying the requirement in the first sentence of paragraph (a) of this Q&A-2, the plan administrator may substitute the annuity starting date, within the meaning of section 1.401(a)-20, Q&A-10, for the date of the distribution."

[GMK]

...The plan administrator may use any method to inform the distributee of the relevant time period, provided that the method is reasonably designed to attract the attention of the distributee. For example, this information could be either provided in the section 402(f) notice or stated in a separate document (e.g., attached to the election form) that is provided at the same time as the notice (my emphasis).

Presumably, since the information is not required to be in the 402(f) notice if it is properly provided elsewhere, it was not deemed necessary to include it in the 2009-68 "Your Rollover Options" model. But, of course, if one doesn't emphasize it with the election form, then it makes sense to add it to the 402(f) notice. Or do both.

[Everett Moreland]

My concern is that I have drafted distribution forms and plan documents that rely on the 30-day notice in the Special Tax Notice, so I am glad I discovered this omission.

[GMK]

And we appreciate your posting what you find.

We include a paragraph about the 30-day consideration period on the distribution election form with a space for the participant to initial if she/he elects to waive the 30-day delay. Not a bad idea to have it in the Notice, too.