New IRS Ruling Eases Plan-to-Plan Rollover of Assets

Posted by Richard on July 9, 2014

In an effort to ease the administrative burden placed on plan sponsors and to foster portability of retirement savings for plan participants, the IRS has issued guidance that simplifies the transfer of assets between all types of qualified retirement plans.

IRS Revenue Ruling 2014-09, published in April, allows the plan administrator for the receiving plan to forego the burdensome task of verifying the legitimacy of the incoming plan — a process that typically involved multiple rounds of communication and paperwork between the two plans with the employee acting as the middleman — and thus ease and expedite the rollover process for both the employer and the employee.

Now, the plan administrator for the receiving plan need only access the most recently filed Form 5500 (annual report) for the incoming plan that is stored online on the EFAST2 database maintained by the Department of Labor. The guidance is effective immediately.

In the past, plan sponsors have had to take on the responsibility for confirming that the incoming rollover monies came from a plan that was compliant and met fiduciary standards. If problems were discovered after the fact, sponsors risked the possibility of having their own plan disqualified. This new ruling helps to ease that potential risk.

Boost to Retirement Savings

In addition to easing the fiduciary risk for plan sponsors, the new ruling is aimed at promoting workers’ retirement readiness by making it easier to retain and grow their retirement savings in tax-qualified plans.

Industry analysts concede this ruling by the IRS is one small step in the right direction, but a crucial one as many plan participants, feeling overwhelmed by the rollover process, either cash out their plans — particularly those with low balances — or leave their money in their former employer’s plan when they change jobs, which can create added costs and risks to all involved.

For more on the ruling visit the IRS website.


Employee Benefit Adviser, “The risk of inactive retirement plan participants,” May 21, 2014.

Pensions & Investments, “Treasury and IRS offer rollover relief,” April 3, 2014.

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