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ARTICLE · 31 JANUARY 2005

IRS Issues Guidance on Automatic Rollover Rule (Employee Benefits Update)

Goodwin Procter LLP
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Also discussed in this article: IRS Issues Final 401(k) Regulations; USERRA Health Continuation Coverage Period Extended for Military Service.

United StatesTax

By Dan Condon, Claire Holland and Kris Wardwell

Originally published January 2005

Contents

IRS Issues Guidance on Automatic Rollover Rule

IRS Issues Final 401(k) Regulations

USERRA Health Continuation Coverage Period Extended for Military Service

IRS Issues Guidance on Automatic Rollover Rule

As discussed in our November 2004 Employee Benefits Update, beginning March 28, 2005 certain mandatory distributions to retirement plan participants must be automatically rolled over to an IRA unless the participant affirmatively elects otherwise. This new rule generally will apply to 401(k) plans and other tax-qualified plans, as well as 403(b) arrangements, which include an automatic cash-out provision for vested benefits not exceeding $5,000.1 Recently, this new automatic rollover rule was explained in IRS guidance that is summarized briefly below.

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