SPECIAL TAX NOTICE - YOUR ROLLOVER OPTIONS - Tax rollover rules for plan payments

Sep 19, 2026

Special Tax Notice explains how rollover eligibility affects taxes for payments received from a retirement plan. It distinguishes rules for amounts paid from a Designated Roth Account versus a Not a Designated Roth Account, including when ordinary taxation applies, when a 10% early distribution tax may apply, and how qualified distributions change the outcome. It also covers whether and where payments can be rolled over to IRAs or employer plans, and how Roth rules depend on the 5-year holding period.

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General Information About Rollovers

How can a rollover affect my taxes?

Where may I roll over the payment?

SPECIAL TAX NOTICE YOUR ROLLOVER OPTIONS You are receiving this notice because all or a portion of a payment you are receiving from the Plan is eligible to be rolled over to either an IRA or an employer plan; or if your payment is from a designated Roth account, to a Roth IRA or designated Roth account in an employer plan. This notice is intended to help you decide whether to do such a rollover. This notice describes the rollover rules that apply to payments from the Plan. To the extent that the rules differ based on whether the payment is from a Designated Roth Account or from an account that is Not a Designated Roth Account, those differences will be identified in each section of this notice. Rules that apply to most payments from a plan are described in the “General Information About Rollovers” section. Special rules that only apply in certain circumstances are described in the “Special Rules and Options” section. GENERAL INFORMATION ABOUT ROLLOVERS How can a rollover affect my taxes? Not a Designated Roth Account: You will be taxed on a payment from the Plan if you do not roll it over. If you are under age 59½ and do not do a rollover, you will also have to pay a 10% additional income tax on early distributions (unless an exception applies) . However, if you do a rollover, you may not have to pay tax until you receive payments later and the 10% additional income tax will not apply if those payments are made after you are age 59½ (or if an exception applies) . If you do a rollover to a Roth IRA, any amounts not previously included in your income will be taxed currently (see the section below titled "If you roll over your payment to a Roth IRA (Not a Designated Roth Account)") . Designated Roth Account: After-tax contributions included in a payment from a designated Roth account are not taxed, but earnings might be taxed. The tax treatment of earnings included in the payment depends on whether the payment is a qualified distribution. If a payment is only part of your designated Roth account, the payment will include an allocable portion of the earnings in your designated Roth account. If the payment from the Plan is not a qualified distribution and you do not do a rollover to a Roth IRA or a designated Roth account in an employer plan, you will be taxed on the earnings in the payment. If you are under age 59½, a 10% additional income tax on early distributions will also apply to the earnings (unless an exception applies) . However, if you do a rollover, you will not have to pay taxes currently on the earnings and you will not have to pay taxes later on payments that are qualified distributions. If the payment from the Plan is a qualified distribution, you will not be taxed on any part of the payment even if you do not do arollover. If you do a rollover, you will not be taxed on the amount you roll over and any earnings on the amount you roll over will not be taxed if paid later in a qualified distribution. A qualified distribution from a designated Roth account in the Plan is a payment made after you are age 59½ (or after your death or disability) and after you have had a designated Roth account in the Plan for at least 5 years. In applying the 5-year rule, you count from January 1 of the year your first contribution was made to the designated Roth account. However, if you dida direct rollover to a designated Roth account in the Plan from a designated Roth account in another employer plan, your participation will count from January 1 of the year your first contribution was made to the designated Roth account in the Plan or, if earlier, to the designated Roth account in the other employer plan. Where may I roll over the payment? Not a Designated Roth Account: You may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity) or an employer plan (a tax-qualified plan, section 403(b) plan, or governmental section 457(b) plan) that will accept the ro

FAQs

What determines how my rollover payment is taxed?

Tax treatment depends on whether the payment is from a Designated Roth Account or from a Not a Designated Roth Account. The notice also distinguishes qualified distributions, which generally receive more favorable tax treatment.

Will I pay taxes if I roll over a payment to a Roth IRA or designated Roth account?

For a Designated Roth Account, after-tax contributions included in the payment are not taxed, though earnings may be taxed depending on whether the distribution is qualified. If you roll over and the later payments are qualified distributions, earnings are generally not taxed when paid later.

Where can I roll over eligible plan payments?

For Not a Designated Roth Account payments, you may roll over to an IRA or to an employer plan that accepts the rollover. For Designated Roth Account payments, you may roll over to a Roth IRA or to a Designated Roth Account in an employer plan that accepts the rollover.

Sep 19, 2026

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