Here's the lowdown
IRS Notice 2026-49 proposes four sample forms and a five-step process for moving money between an employer plan and another plan or IRA.
The process favors encrypted communication and electronic transfers, but the forms are optional and still allow a paper check when electronic transfer is unavailable.
Advisers and custodians asked the IRS to set a firm path away from paper checks, wet signatures, distribution letters, and other slow manual steps.
A retirement rollover can still involve a strange trip through the mail.
A worker may receive a paper check made out to a new custodian, then become the courier between two financial companies. The money is in motion, but it may spend days outside the market while everyone waits for envelopes and signatures.
The IRS has proposed a cleaner system. The catch is that its new playbook is optional, and paper checks are still part of the backup plan.
Four forms are supposed to make one transfer easier
IRS Notice 2026-49 lays out four sample forms and five steps for a direct rollover involving an employer retirement plan and another plan or IRA.
The receiving plan starts the process. It creates a unique rollover identification number, sends the request to the distributing plan, and lists the electronic transfer methods it can accept.
The distributing plan then verifies the participant, confirms the money is eligible to move, and tells the receiving plan which transfer methods are available. The receiving plan chooses a method, and the distributing plan sends the funds.
The forms use the same data and terms at each step. They also call for encrypted transfers of personal information and direct communication between the two plans, instead of making the participant referee the process.
That is the useful part. A common workflow can reduce missing information, mismatched forms, and the classic request to start over because one custodian wants a different document.
The paper escape hatch remains
The notice tells plans to use electronic communication and transfers as much as possible. It also encourages them to build the forms into an application programming interface, clearinghouse, or other electronic platform.
But none of that is mandatory yet.
Use of the sample forms and proposed procedures is optional. If an electronic transfer is not available, the distributing plan can still issue a check payable to the receiving plan for the participant and send it directly to the receiving plan.
That is better than mailing the check to the participant. It does not create the fully digital system many advisers wanted.
The IRS itself cited a Government Accountability Office finding that nearly one-third of surveyed participants received paper checks they had to forward to the receiving plan. The same research noted that a worker may change jobs 10 or more times over a 40-year career, creating plenty of chances for scattered accounts and stalled transfers.
Advisers want the old steps retired
Public comments described the manual friction in plain terms.
One adviser reported a rollover that required wet signatures and hard-copy forms to travel between the receiving and distributing custodians before the transaction could begin. Another asked for paper checks to be phased out by plan size, followed by a firm end date and a shift to automated clearing house or wire transfers.
Custodians raised similar concerns. Fidelity said different data requirements, manual documents, and paper checks create longer processing times, operational risk, and confusion. Betterment asked for standardized digital transfers and an end to burdensome requirements such as distribution letters and medallion signature guarantees.
The IRS is considering tougher follow-up rules. Those could stop plans from sending rollover checks to participants, require electronic transfers or checks sent directly to the receiving plan, and classify some manual requirements as impermissible.
The agency also acknowledged the tradeoff: plans and custodians may need time and new infrastructure before a fully electronic rule can work.
What accounting firms should watch
For accountants advising business owners or individual clients, the immediate change may be procedural rather than tax-driven. The tax rules for a valid rollover remain, including eligibility, withholding, spousal consent, and required minimum distribution requirements.
The bigger question is who carries the administrative burden.
A standard set of forms could make client support easier, even if adoption is uneven. A mandatory digital-transfer rule would go further by shrinking the window for lost checks, missed instructions, and money sitting outside a retirement account.
The IRS has built the outline for a better rollover machine. Final guidance will show whether it becomes a shared digital system or one more optional form sitting beside the paper process it was meant to replace.
