IRS Seeks to Ease Plan-to-Plan Rollovers

By John Iekel • April 14, 2014 • 0 Comments

New guidance from the IRS may make the plan-to-plan rollover process a little smoother. Revenue Ruling 2014-9, issued on April 3, is intended to make it easier for plan participants to consolidate their retirement savings accounts by making it easier for them to move assets from one employer plan to another. 

The ruling allows the plan administrator of a new employee’s plan to use a readily available online database to confirm the tax qualified status of the former employer’s plan. This eliminates the need for the two plans to communicate (with the participant as go-between), expedites the rollover and reduces associated paperwork. 

The ruling seeks to ameliorate the situation that often arose in which the receiving plan must protect its tax-qualified status by determining that the source of the funds — the former employer’s plan — is also tax-qualified and that the incoming transfer complies with applicable rules. This can make the process complicated, since the new employer’s plan may require participants to obtain a letter or other paperwork from the former employer’s plan — which, in turn, can frustrate participants to such an extent that they may take a distribution instead of making a rollover. 

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John Iekel is Senior Writer at ASPPA, as well as Editor of the ASPPA Net and NTSA Net web portals.