[14505]
March 6, 2002
TO: PENSION MEMBERS No. 8-02
PENSION OPERATIONS ADVISORY COMMITTEE No. 13-02
RE: IRS CHANGES TO SAFE HARBOR EXPLANATION UNDER CODE SECTION 402(f)
Late last year, the Internal Revenue Service issued an advance copy of Notice 2002-3,
which contained two “safe harbor explanations” that plan administrators may provide to
recipients of eligible rollover distributions in order to satisfy section 402(f) of the Internal
Revenue Code.1 The version of Notice 2002-3 published in the Internal Revenue Bulletin,
however, differs in some respects from the advance copy. A copy of the final version is
attached.
In the explanation applicable to distributions from section 401(a) and 403(a) plans and
section 403(b) arrangements, the last sentence, under the heading “Required Minimum
Payments,” on page 9 of the advance copy of the Notice, reads in the final version as follows:
“Special rules apply if you own more than 5% of your employer.” In addition, under the
heading “Special Tax Treatment If You Were Born before January 1, 1936,” on page 13 of the
advance copy, the final version adds a reference to “a governmental 457 plan” in the third
sentence of the first full paragraph. Finally, in both safe harbor explanations, at pages 11 and 20
of the advance copy, in the discussion of voluntary withholding, the final version states as
follows: “If you do nothing, an amount will be taken out of this portion of your payment for
federal income tax withholding.”
Kathy D. Ireland
Associate Counsel
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Attachment (in .pdf format)
1 See Institute Memorandum to Pension Members No. 42-01 and Pension Operations Advisory Committee No. 79-01,
dated December 27, 2001.