Looking for 401k Rollover Rules? Here Are 5 Things You Should Know About the New 2026 IRS Notices

If you’ve been keeping an eye on your retirement accounts lately, you’ve probably noticed that things are changing, and fast. Between fluctuating markets and new legislation, staying on top of your nest egg can feel like a full-time job.

Here at Solomon Estate and Wealth Planning, we get it. Retirement planning shouldn’t feel like a chore, but it does require knowing the play-by-play. As of May 2026, the IRS has released several key updates and notices that specifically target how we handle our 401(k) accounts. If you’re thinking about moving your money, you need to be aware of the latest 401k rollover rules to avoid unnecessary taxes or penalties.

Let’s dive into the five most important things you need to know about these new 2026 IRS notices.

1. Not Every Payout is "Rollable" Anymore (Notice 2026-13)

One of the biggest updates this year comes from IRS Notice 2026-13. This notice refreshes the "safe harbor" explanation that plan administrators have to give you before you take money out of your account. In plain English? The IRS is making sure you know exactly what can, and cannot, be rolled over into a new account.

A lot of people assume that any check they get from their 401(k) can be tucked away into an IRA without a tax hit. Unfortunately, that’s a dangerous assumption. In 2026, the list of distributions that cannot be rolled over includes:

• Required Minimum Distributions (RMDs): If you’re at the age where the government forces you to take money out, that specific amount must stay out. You can't roll an RMD into another tax-deferred account.

• Hardship Distributions: If you took money out for an emergency, the IRS considers that "spent" money, not "moveable" money.

• Corrective Distributions: If you accidentally over-contributed and the plan is giving you back the excess, that’s taxable income, not a rollover candidate.

• Small Automatic Refunds: If you just started a job and requested a refund of your first few contributions within 90 days, that’s not eligible for a rollover.

Before you make a move, check your 402(f) notice (that’s the legal jargon document your HR department sends you). It will outline exactly what part of your balance is eligible to move. If you're unsure where to start, check out our 401k Rollover 101 guide.

2. The Direct Rollover is Your Best Friend

We see it all the time: someone leaves a job, gets a check in the mail for their 401(k) balance, and thinks, "I’ll just deposit this into my IRA next week."

Stop right there!

The 2026 IRS guidance continues to emphasize that the method you choose for your rollover is just as important as the amount. You have two main choices: the Direct Rollover and the 60-Day (Indirect) Rollover.

With a Direct Rollover, the money moves from "Trustee to Trustee." It never touches your hands. This is the gold standard because there is zero tax withholding and zero risk of missing a deadline.

On the other hand, the 60-day rollover is a bit of a gamble. If the plan pays the money to you, they are legally required to withhold 20% for federal income taxes. To complete the rollover and keep it tax-free, you have to deposit the full amount (including that 20% you didn't receive!) into a new account within 60 days. If you don't have the extra cash to cover the 20% withholding, that portion becomes a taxable distribution.

If you're worried about the fine print, you aren't alone. We’ve put together a list of 7 mistakes people make when rolling over a 401(k) to help you navigate these waters safely.

3. The "High Earner" Roth Catch-Up Rule is Officially Here

If you’re a high-performing professional making over $150,000 (based on your 2025 FICA wages), 2026 is a milestone year. Under the SECURE 2.0 Act, the IRS is now mandating that catch-up contributions for high earners must be Roth.

What does this mean for your 401k rollover rules? Well, it changes the "flavor" of the money sitting in your account. Previously, many high earners kept everything in pre-tax accounts. Now, as you contribute more in your 50s and 60s, a larger portion of your 401(k) will be in a Roth sub-account.

When you eventually decide to roll that money over, you’ll have a two-part move:

1. Your Pre-tax funds will likely go to a Traditional IRA.

2. Your Roth funds will go to a Roth IRA.

Mixing these up can cause a massive tax headache. If you roll pre-tax money into a Roth IRA, that’s considered a "conversion," and you’ll owe taxes on every penny of it in the year you move it. It’s a great strategy for some, but a nasty surprise for others.

4. RMD Rules and the "Roth Advantage" in 2026

The IRS has finally leveled the playing field for Roth 401(k)s. In the past, many people felt forced to roll their Roth 401(k) into a Roth IRA because the 401(k) version still required Required Minimum Distributions (RMDs) once you hit a certain age.

Thanks to the new 2026 notices and SECURE 2.0 updates, RMDs on Roth accounts in employer plans have been eliminated.

This changes the "Why" behind your rollover. If you were only moving your money to avoid RMDs, you might not need to move it as quickly anymore. However, many of our clients still choose to roll over because they want more investment flexibility or because they want to consolidate their accounts into one place.

If you are approaching age 65, your rollover decisions often overlap with your healthcare decisions. It’s the perfect time to review your Medicare and retirement planning checklist to make sure your income strategy and your insurance strategy are working together.

5. Destination Matters: IRA vs. Annuity vs. New Plan

When you’re looking at 401k rollover rules, you have to decide where the money is landing. In 2026, we are seeing more people explore options beyond just a standard brokerage account.

If your goal is to create a "pension-like" feel for your retirement, you might consider rolling your 401(k) into an annuity. This can provide a guaranteed lifetime income stream, which is something a standard IRA doesn't offer.

Is an annuity better than an IRA rollover? It depends on your goals. We break down the pros and cons in our post about Annuity vs. IRA Rollovers.

Another thing to keep in mind for 2026: the "one-per-year" rollover rule. While you can move money from a 401(k) to an IRA as many times as you have old 401(k)s, you are generally limited to only one indirect (60-day) rollover between IRAs in a 12-month period. Direct transfers don't count toward this limit, which is another reason why we always advocate for the direct route!

Final Thoughts: Don't Let the Rules Intimidate You

Navigating the 2026 IRS notices can feel like trying to read a map in a different language. But remember, these 401k rollover rules are designed to provide a framework: not to stop you from accessing your wealth.

Whether you’re changing jobs, retiring, or just looking to gain more control over your investments, the key is to take your time and get professional eyes on your plan. Small mistakes in the rollover process can lead to big tax bills, and once the money is moved incorrectly, the IRS is rarely in a "forgiving" mood.

If you’re ready to take the next step and want to ensure your retirement is on the right track, let's chat. At Solomon Estate and Wealth Planning, we specialize in making the complex simple so you can focus on enjoying your retirement.

Check out our retirement planning services or give us a call to discuss your specific situation!

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This information is for educational purposes only and does not constitute investment, legal, or tax advice. Please consult with a qualified professional regarding your individual situation.

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