The Tax Management Transfer Pricing Report ™ provides news and analysis on U.S. and international governments’ tax policies regarding intercompany transfer pricing.
By Andrew J. Fawbush, Esq., Laura Miller Andrew, Esq., and Lisa Rhein Carrasco, Esq.
Smith, Gambrell & Russell, LLP, Jacksonville, FL and Atlanta, GA
When qualified retirement plans make a distribution from the plan that is eligible to be rolled over to an individual retirement account (IRA) or another qualified retirement plan, plan administrators are required to provide a letter to the participant of their right to rollover the distribution to avoid paying taxes at time of distribution.
The IRS has recently updated its model safe harbor notices in Notice 2014-74. This notice is to be used by plan administrators of qualified retirement plans to satisfy this rollover tax notice requirement. The changes to the safe harbor notices reflect the IRS's revised position regarding the allocation of after-tax rollover amounts where distributed to more than one destination and where the distribution consists of both pre-tax and after-tax amounts.
The updated rollover notices incorporate the following:
By January 1, 2015, plan administrators should review their rollover election forms to ensure that participants are able to indicate where the taxable and non-taxable portions of their distributions are to be sent. Additionally, participant rollover and tax distribution notices based on the IRS model notices will need to be revised. Lastly, summary plan descriptions that include descriptions of the prior rollover rules on the allocation of taxable and non-taxable distribution amounts may need to be revised as well.
For more information, in the Tax Management Portfolios, see Bosley and Hutzelman, 370 T.M., Qualified Plans — Taxation of Distributions, Kennedy, 367 T.M., IRAs, and in Tax Practice Series, see ¶5550, Tax Aspects of Qualified Retirement Plans, ¶5610, IRAs.
© 2015, Smith, Gambrell & Russell, LLP
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)