Treasury, IRS propose electronic-first rollover standards

About a third of retirement savers who move money from one workplace plan to another end up holding a paper check and serving as their own courier. The Treasury and the IRS have proposed a process to pull them out of that chain. In IRS Notice 2026-49, issued August 13 under the SECURE 2.0 Act of 2022, they laid out standardized forms and procedures for rollovers between workplace plans and some individual retirement accounts. PLANADVISER was first to report the notice.

Plans would communicate directly with each other, bypassing the participant. The agencies want encrypted communications, a unique identification number attached to each rollover, and electronic fund transfers wherever the receiving plan can take them. That ID becomes a shared case file, giving both plans a reference point and an audit trail paper cannot match. The intent is speed and consistency: fewer touchpoints, fewer lost documents, fewer calls between a saver and two different call centers.

Where no electronic transfer is available, the fallback still keeps the money out of the participant's hands. The check is made payable to the receiving plan and sent straight there. Paper survives, but the individual no longer endorses it or forwards it.

For now, participation is voluntary. The notice explicitly says Treasury and the IRS are considering further rules that would restrict paper checks and require electronic transfers where plans have the technology. Read the two together and the trajectory is clear: a voluntary standard with a mandate already in view.

The proposal reaches workplace retirement plans and some individual retirement accounts, covering both the plan-to-plan transfer and the plan-to-IRA move. It is a proposed process rather than a final rule, and public comments will shape the forms before adoption.

The rollover guidance lands in the same implementation wave as other SECURE 2.0 follow-ons, including the Labor Department's work on a benchmark for private assets in defined contribution plans, which Retirement Capital Daily has covered on this desk. The rollover rule is plainer but broader in reach: nearly every worker who changes jobs eventually contends with the check problem.

The operational weight falls on plan sponsors and the recordkeepers who build their infrastructure. Encrypted channels need to exist. Rollover identifiers need to be issued. Transfer logic needs to be programmed. Small plans without a recordkeeper face the steepest climb, though the proposal's assumptions point toward a provider-packaged solution.

Sponsors who adopt early get a say in how the standard settles. The path from voluntary to mandatory means spending money now could soften the rule's rough edges later. The comment file will show whether the industry treats the proposal as a draft or a done deal.

Comments close October 23, and that window is the industry's best shot at shaping the next step. Sponsors and recordkeepers can argue for a longer runway or push back on the mandatory phase. The agencies have not set a date for the follow-up rules, leaving the timeline open.

Expect the comment file to gather around one phrase: "when plans have the technology." That test decides whether a given plan is required to go electronic or can keep mailing checks. It is the line where the voluntary becomes mandatory.

The GAO finding is the quiet argument for the change: nearly one-third of surveyed participants received paper checks they then had to send on to the new plan. Remove that courier role and the rollover stops being a chore people postpone. For the industry, that is the difference between assets that move and assets that cash out.