Anyone who has moved retirement money out of an old employer’s plan knows how frustrating it can be. Every administrator has their own forms. Timelines are all over the place. Paper checks show up weeks later…
⏱ 4 min read
Anyone who has moved retirement money out of an old employer’s plan knows how frustrating it can be. Every administrator has their own forms. Timelines are all over the place. Paper checks show up weeks later with vague instructions. The whole thing should have been fixed a long time ago.
The IRS is finally doing something about it. Notice 2026-49 puts out four sample forms and a five-step procedure meant to bring some consistency to direct rollovers. Plans do not have to use them, and there is no safe harbor, but you can see where this is going.
The Problem Worth Solving
When you leave a job, you have to figure out what to do with your 401(k). You can cash it out and take the tax hit. You can leave it sitting there. Or you can roll it into a new employer’s plan or an IRA.
A direct rollover is usually the way to go. The money travels straight from the old plan to the new one without ever hitting your bank account, which keeps things clean and avoids the 60-day deadline you face if you take possession yourself.
The trouble is that every plan does things differently. A 2024 GAO study found that roughly one in three people doing rollovers ended up with a paper check in hand that they were supposed to forward themselves. Checks get lost. They sit on the counter for weeks. And the whole time, that money is not invested anywhere.
How the New System Works
Here is what Treasury is proposing. You fill out Form 1 and give it to the plan or IRA that will be receiving your money. That form lets the receiving plan reach out to your old plan and handle the transfer on your behalf. The two plans swap Forms 2 through 4 to make sure everything is in order. If something goes sideways, the receiving plan has to tell you.
The IRS wants this done electronically whenever possible. When electronic is not an option, the old plan should write a check payable to the receiving plan for your benefit and mail it directly there. No more sending checks to participants and hoping they take it from there.
Tax Rules Stay the Same
None of this changes how rollovers are taxed. Eligible distributions that complete a proper rollover still stay out of income. You still cannot roll over a required minimum distribution. Pre-tax money stays pre-tax. Roth stays Roth. This is about the plumbing, not the tax code.
IRA-to-IRA transfers are not covered here. Those already go through the ACATS electronic system, so Treasury left them alone.
No Safe Harbor Yet
Plans can use these forms, change them, or ignore them completely. Right now, there is no reward for following along.
That could change. Treasury says it is thinking about offering safe harbors down the road. A receiving plan that uses the standard forms might eventually be allowed to assume the rollover is valid unless something looks off. That would give administrators a real incentive to adopt the new process.
Conclusion and What Comes Next
The IRS has hinted at bigger changes. Future guidance might require electronic transfers across the board, kill off the practice of mailing checks to participants, and get rid of some of the procedural friction that slows things down.
For now, the sample forms are sitting in the appendix of Notice 2026-49. They are there if you want them. If you have ever spent weeks tracking down a check that went to the wrong address or trying to explain one plan’s process to another plan’s administrator, you understand what Treasury is trying to fix. They want rollovers to be faster, simpler, and harder to mess up. This is a start.
Rolling Over Your 401(k) Just Got Less Painful – Here’s What the IRS Changed
October 1, 2026 · Blog, Tax and Financial News
⏱ 4 min read
Anyone who has moved retirement money out of an old employer’s plan knows how frustrating it can be. Every administrator has their own forms. Timelines are all over the place. Paper checks show up weeks later with vague instructions. The whole thing should have been fixed a long time ago.
The IRS is finally doing something about it. Notice 2026-49 puts out four sample forms and a five-step procedure meant to bring some consistency to direct rollovers. Plans do not have to use them, and there is no safe harbor, but you can see where this is going.
The Problem Worth Solving
When you leave a job, you have to figure out what to do with your 401(k). You can cash it out and take the tax hit. You can leave it sitting there. Or you can roll it into a new employer’s plan or an IRA.
A direct rollover is usually the way to go. The money travels straight from the old plan to the new one without ever hitting your bank account, which keeps things clean and avoids the 60-day deadline you face if you take possession yourself.
The trouble is that every plan does things differently. A 2024 GAO study found that roughly one in three people doing rollovers ended up with a paper check in hand that they were supposed to forward themselves. Checks get lost. They sit on the counter for weeks. And the whole time, that money is not invested anywhere.
How the New System Works
Here is what Treasury is proposing. You fill out Form 1 and give it to the plan or IRA that will be receiving your money. That form lets the receiving plan reach out to your old plan and handle the transfer on your behalf. The two plans swap Forms 2 through 4 to make sure everything is in order. If something goes sideways, the receiving plan has to tell you.
The IRS wants this done electronically whenever possible. When electronic is not an option, the old plan should write a check payable to the receiving plan for your benefit and mail it directly there. No more sending checks to participants and hoping they take it from there.
Tax Rules Stay the Same
None of this changes how rollovers are taxed. Eligible distributions that complete a proper rollover still stay out of income. You still cannot roll over a required minimum distribution. Pre-tax money stays pre-tax. Roth stays Roth. This is about the plumbing, not the tax code.
IRA-to-IRA transfers are not covered here. Those already go through the ACATS electronic system, so Treasury left them alone.
No Safe Harbor Yet
Plans can use these forms, change them, or ignore them completely. Right now, there is no reward for following along.
That could change. Treasury says it is thinking about offering safe harbors down the road. A receiving plan that uses the standard forms might eventually be allowed to assume the rollover is valid unless something looks off. That would give administrators a real incentive to adopt the new process.
Conclusion and What Comes Next
The IRS has hinted at bigger changes. Future guidance might require electronic transfers across the board, kill off the practice of mailing checks to participants, and get rid of some of the procedural friction that slows things down.
For now, the sample forms are sitting in the appendix of Notice 2026-49. They are there if you want them. If you have ever spent weeks tracking down a check that went to the wrong address or trying to explain one plan’s process to another plan’s administrator, you understand what Treasury is trying to fix. They want rollovers to be faster, simpler, and harder to mess up. This is a start.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
According to FitchRatings, over the past 12 months ending August 2026, there were 109 defaults by 89 entities, compared to the same period ending July 2026 where 83 entities saw 105 defaults. With businesses (especially life insurers) exposed to asset…
⏱ 3 min read
According to Fitch Ratings, over the past 12 months ending August 2026, there were 109 defaults by 89 entities, compared to the same period ending July 2026, when 83 entities saw 105 defaults. With businesses (especially life insurers) exposed to asset management risks, it’s important to understand how to find financial balance.
Defining Asset Valuation Reserve (AVR)
An AVR is a repository for life insurance companies to offset a drop in markets and/or asset portfolios that are meant to fulfill contractual obligations for claims, annuities, and related insurance obligations.
According to the American Council of Life Insurers and the National Association of Insurance Commissioners (NAIC), the AVR factors in every realized investment profit and loss after factoring in net deferred taxes for credit and equity investments. Companies are required to fund the AVR initially and adjust it annually to manage ongoing and future obligations.
As part of the agreement that insurance companies have to pay out an insurance claim in exchange for receiving premiums, an insurance company has to ensure they are financially solvent to keep paying out claims. The same requirement also pertains to annuities that an insurance company contracts with customers, including making periodic payments. Through the valuation reserve requirements, insurance companies can measure their reserves and investments to increase the chance they’ll be able to meet their financial obligations regularly.
Depending on the interest rate environment, insurance companies can experience threats to their allocated reserves to continue annuity payments over time compared to life benefits paid out all at once. Based on the American Council of Life Insurers, the percentage in reserves for annuities increased to 23 percent in 1990, up from 8 percent in 1980, showing how insurers must keep up with client demands and manage risk.
How it’s Constructed
An AVR creates an organized set of entries for the assets and liabilities. Insurance companies are also able to compare assets and liabilities against actuarial valuation standards to plan for projected unknown, unsettled asset shortfalls. It also helps companies monitor the appropriate detection of long-term anticipated stock investment proceeds. For publicly traded insurance companies, it provides greater transparency for equity and bond holders, along with regulators.
The default component accounts for four-fifths of the AVR. Insurance companies implement investment vehicles such as mortgages and fixed-income options to manage their credit risk. As the name implies, the equity piece of the AVR balances the reserve with preferred and common equities or stocks, along with real estate investments. This mix is required for insurance companies because it creates a buffer from gains realized from positive market years, which offset insurance company obligations during periods of negative market performance.
Building the AVR is unique to each company’s financial makeup and needs to be dynamic, but must follow industry standards. While insurers or any market participant cannot predict the market with 100 percent accuracy, insurers with a properly constructed and reported AVR can more easily navigate an economy that becomes turbulent and uncertain.
According to Fitch Ratings, over the past 12 months ending August 2026, there were 109 defaults by 89 entities, compared to the same period ending July 2026, when 83 entities saw 105 defaults. With businesses (especially life insurers) exposed to asset management risks, it’s important to understand how to find financial balance.
Defining Asset Valuation Reserve (AVR)
An AVR is a repository for life insurance companies to offset a drop in markets and/or asset portfolios that are meant to fulfill contractual obligations for claims, annuities, and related insurance obligations.
According to the American Council of Life Insurers and the National Association of Insurance Commissioners (NAIC), the AVR factors in every realized investment profit and loss after factoring in net deferred taxes for credit and equity investments. Companies are required to fund the AVR initially and adjust it annually to manage ongoing and future obligations.
As part of the agreement that insurance companies have to pay out an insurance claim in exchange for receiving premiums, an insurance company has to ensure they are financially solvent to keep paying out claims. The same requirement also pertains to annuities that an insurance company contracts with customers, including making periodic payments. Through the valuation reserve requirements, insurance companies can measure their reserves and investments to increase the chance they’ll be able to meet their financial obligations regularly.
Depending on the interest rate environment, insurance companies can experience threats to their allocated reserves to continue annuity payments over time compared to life benefits paid out all at once. Based on the American Council of Life Insurers, the percentage in reserves for annuities increased to 23 percent in 1990, up from 8 percent in 1980, showing how insurers must keep up with client demands and manage risk.
How it’s Constructed
An AVR creates an organized set of entries for the assets and liabilities. Insurance companies are also able to compare assets and liabilities against actuarial valuation standards to plan for projected unknown, unsettled asset shortfalls. It also helps companies monitor the appropriate detection of long-term anticipated stock investment proceeds. For publicly traded insurance companies, it provides greater transparency for equity and bond holders, along with regulators.
The default component accounts for four-fifths of the AVR. Insurance companies implement investment vehicles such as mortgages and fixed-income options to manage their credit risk. As the name implies, the equity piece of the AVR balances the reserve with preferred and common equities or stocks, along with real estate investments. This mix is required for insurance companies because it creates a buffer from gains realized from positive market years, which offset insurance company obligations during periods of negative market performance.
Building the AVR is unique to each company’s financial makeup and needs to be dynamic, but must follow industry standards. While insurers or any market participant cannot predict the market with 100 percent accuracy, insurers with a properly constructed and reported AVR can more easily navigate an economy that becomes turbulent and uncertain.
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
Anyone who has moved retirement money out of an old employer’s plan knows how frustrating it can be. Every administrator has their own forms. Timelines are all over the place. Paper checks show up weeks later with vague instructions. The whole thing should have been fixed a long time ago.
According to Fitch Ratings, over the past 12 months ending August 2026, there were 109 defaults by 89 entities, compared to the same period ending July 2026, when 83 entities saw 105 defaults. With businesses (especially life insurers) exposed to asset management risks, it’s important to understand how to find financial balance.