These synopses are intended only as aids to the reader in

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2026–6

February 2, 2026

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

INCOME TAX

Announcement 2026-4, page 533.

Notice 2026-11, page 491.

This announcement contains a correction to Announcement

2000-80, 2000-40 I.R.B. 320-321, which contains an outdated phone number. This announcement corrects that

error. In the section labelled TOLL-FREE NUMBER FOR THE

APPEALS OFFICER (CUSTOMER SERVICE/OUTREACH) PROGRAM, a customer service phone number is provided for

Appeals. That number is outdated and no longer in use. The

current phone number is (855) 865-3401.

EMPLOYEE PLANS

Notice 2026-12, page 496.

This notice sets forth updates on the corporate bond

monthly yield curve, the corresponding spot segment rates

for December 2025 used under § 417(e)(3)(D), the 24-month

average segment rates applicable for January 2026, and the

30-year Treasury rates, as reflected by the application of

§ 430(h)(2)(C)(iv).

Notice 2026-13, page 499.

This notice provides two safe harbor explanations that retirement plans may use to satisfy the requirement under section

402(f) to provide certain information to recipients of eligible

rollover distributions. One safe harbor explanation describes

the rollover rules for distributions that are not from a designated Roth account, and the other safe harbor explanation

describes the rollover rules for distributions from a designated Roth account. The safe harbor explanations in the

notice modify the two safe harbor explanations provided in

Notice 2020-62 to reflect certain legislative changes related

to the SECURE 2.0 Act and improve readability and usefulness for recipients.

Finding Lists begin on page ii.

This notice announces that the Department of the Treasury

(Treasury Department) and the Internal Revenue Service (IRS)

intend to issue proposed regulations (forthcoming proposed

regulations) that would implement the additional first year

depreciation deduction under § 168(k) of the Internal Revenue

Code (Code), as amended by §§ 70301 and 70434(g) of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known

as the One, Big, Beautiful Bill Act (OBBBA), including proposed

regulations that would modify § 1.168(k)-2 to include applicable qualified sound recording productions commencing in

taxable years ending after July 4, 2025. The Treasury Department and IRS expect the forthcoming proposed regulations to

be consistent with the interim guidance provided in sections 3

through 5 of this notice.

Rev. Rul. 2026-3, page 485.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes of

sections 382, 1274, 1288, 7872 and other sections of the

Code, tables set forth the rates for February 2026.

Rev. Rul. 2026-4, page 487.

This revenue ruling concludes that, under section 149(c)(2)(C)

(ii), bonds issued by the Railroad Corporation, a public corporation of a State, to finance the construction, acquisition, and

improvement of certain property are not required to satisfy

the rules in sections 141 through 147 to qualify as tax-exempt bonds under section 103(a). However, such bonds are

required to satisfy the rules in sections 148, 149, and 150 to

qualify as tax-exempt bonds under section 103(a).

TAX CONVENTIONS

Announcement 2026-3, page 518.

The competent authorities of the United States of America

and the Kingdom of Spain have entered into an arrange-

ment regarding the implementation of the arbitration process provided for in paragraphs 5 and 6 of Article 26 of the

Convention between the Kingdom of Spain and the United

States of America for the Avoidance of Double Taxation and

the Prevention of Fiscal Evasion with respect to Taxes on

Income.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

February 2, 2026 

Bulletin No. 2026–6

Part I

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,

1288, 7520, 7702, 7872.)

Rev. Rul. 2026-3

This revenue ruling provides various prescribed rates for federal income

AFR

110% AFR

120% AFR

130% AFR

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

AFR

110% AFR

120% AFR

130% AFR

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

Bulletin No. 2026–6

tax purposes for February 2026 (the

current month). Table 1 contains the

short-term, mid-term, and long-term

applicable federal rates (AFR) for the

current month for purposes of section

1274(d) of the Internal Revenue Code.

Table 2 contains the short-term, midterm, and long-term adjusted applicable federal rates (adjusted AFR) for the

current month for purposes of section

1288(b). Table 3 sets forth the adjusted

federal long-term rate and the longterm tax-exempt rate described in section 382(f). Table 4 contains the appro-

priate percentages for determining the

low-income housing credit described in

section 42(b)(1) for buildings placed in

service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service

after July 30, 2008, shall not be less

than 9%. Finally, Table 5 contains the

federal rate for determining the present

value of an annuity, an interest for life

or for a term of years, or a remainder or

a reversionary interest for purposes of

section 7520.

REV. RUL. 2026-3 TABLE 1

Applicable Federal Rates (AFR) for February 2026

Period for Compounding

Annual

Semiannual

Quarterly

Short-term

3.56%

3.53%

3.51%

3.92%

3.88%

3.86%

4.28%

4.24%

4.22%

4.64%

4.59%

4.56%

Mid-term

3.86%

3.82%

3.80%

4.24%

4.20%

4.18%

4.63%

4.58%

4.55%

5.03%

4.97%

4.94%

5.81%

5.73%

5.69%

6.80%

6.69%

6.63%

Long-term

4.70%

4.65%

4.62%

5.19%

5.12%

5.09%

5.66%

5.58%

5.54%

6.14%

6.05%

6.00%

Annual

2.70%

2.92%

3.56%

REV. RUL. 2026-3 TABLE 2

Adjusted AFR for February 2026

Period for Compounding

Semiannual

2.68%

2.90%

3.53%

485

Quarterly

2.67%

2.89%

3.51%

Monthly

3.50%

3.85%

4.20%

4.55%

3.79%

4.16%

4.54%

4.92%

5.66%

6.60%

4.61%

5.07%

5.52%

5.98%

Monthly

2.67%

2.88%

3.50%

February 2, 2026

REV. RUL. 2026-3 TABLE 3

Rates Under Section 382 for February 2026

Adjusted federal long-term rate for the current month

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal

long-term rates for the current month and the prior two months.)

3.56%

3.56%

REV. RUL. 2026-3 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for February 2026

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after

July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

7.99%

Appropriate percentage for the 30% present value low-income housing credit

3.43%

REV. RUL. 2026-3 TABLE 5

Rate Under Section 7520 for February 2026

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,

or a remainder or reversionary interest

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2026. See Rev. Rul. 2026-3, page 485.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2026. See Rev. Rul. 2026-3, page 485.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of February 2026. See

Rev. Rul. 2026-3, page 485.

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2026. See Rev. Rul. 2026-3, page 485.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of February 2026. See Rev. Rul.

2026-3, page 485.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2026. See Rev. Rul. 2026-3, page 485.

4.6%

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2026. See Rev. Rul. 2026-3, page 485.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of

February 2026. See Rev. Rul. 2026-3, page 485.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of February 2026. See Rev. Rul.

2026-3, page 485.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2026. See Rev. Rul. 2026-3, page 485.

February 2, 2026

486

Bulletin No. 2026–6

Section 149.—Bonds

Must Be Registered To

Be Tax Exempt; Other

Requirements

(Also §§ 103, 141-148, 150)

Rev. Rul. 2026-4

ISSUE

Whether bonds issued by the Alaska

Railroad Corporation (Railroad Corporation) to finance the construction, acquisition, and improvement of certain property

are required to satisfy the rules in §§ 141

through 147 of the Internal Revenue Code

of 1986 (Code)1 to qualify as tax-exempt

bonds under § 103(a)?

FACTS

The Federal government built a railroad in the State of Alaska (State) to

serve the transportation and development

needs of the State and later transferred the

assets of that railroad (State Railroad) to

the State pursuant to the Alaska Railroad

Transfer Act of 1982, Title VI of Public

Law 97-468, 96 Stat. 2543, 2556 (1983)

(Railroad Act). The Railroad Act contemplates that the State continue to operate the

railroad as a rail carrier after the transfer.

By statute, the State established the Railroad Corporation as a public corporation

to operate the State Railroad.

In connection with a project in the

State to extract, process, liquify, and transport natural gas (LNG Project), the Railroad Corporation intends to issue bonds

to finance the construction, acquisition,

and improvement of facilities and other

property that are located within the State

and that are directly related to the LNG

Project. Such facilities and other property

are collectively referred to in this revenue

ruling as the “Property” and consist of:

• The facilities and other related project

infrastructure described in Section I,

Background and Proposal, of the

Order Granting Authorization Under

Section 3 of the Natural Gas Act

1

issued by the Federal Energy Regulatory Commission on May 21, 2020,

see 171 FERC ¶ 61,134 (2020);

• Railroad tracks and embankment, rail

sidings, rail extensions, rail terminal

yards, locomotives and rail cars to

transport materials and equipment

necessary for pipeline construction

and project operations, as well as

trains equipped to carry liquified natural gas (LNG);

• Port facilities to import pipe and transport construction materials (including

supplies, fuel, and equipment), and

infrastructure equipped to store LNG,

to serve LNG carrier ships, to transfer

LNG to carrier ships, to transfer LNG

from carrier ships to LNG storage,

and to regasify LNG;

• Airports and helicopter pads;

• Roads,

highways,

causeways,

bridges;

• Power generation facilities;

• Communications infrastructure;

• Construction-related housing; and

• Other facilities directly related to the

LNG Project.

For the avoidance of doubt, a facility or

property does not qualify as Property

solely because it uses natural gas produced by the LNG Project.

LAW

Internal Revenue Code of 1986

Section 103(a) generally provides that,

except as otherwise provided in § 103(b),

gross income does not include interest on

any State or local bond. Section 103(b)

provides that § 103(a) does not apply to

any private activity bond that is not a qualified bond (within the meaning of § 141),

to any arbitrage bond (within the meaning of § 148), or to any bond that does

not meet the applicable requirements of

§ 149. Section 103(c)(1) defines a “State

or local bond” as an obligation of a State

or political subdivision thereof.

Section 141(a) defines the term “private activity bond” as any bond issued as

part of an issue that meets the private business use test of § 141(b)(1) and the private

security or payment test of § 141(b)(2) or

that meets the private loan financing test

of § 141(c).

Section 141(b)(1) provides that, except

as provided in that subsection, an issue

meets the private business use test if more

than 10 percent of the proceeds of the

issue are to be used for any private business use. Under § 141(b)(6)(A), the term

“private business use” means use (directly

or indirectly) in a trade or business carried

on by any person other than a governmental unit, although use as a member of the

general public is not taken into account.

Under § 141(b)(6)(B), any activity carried

on by a person other than a natural person

is treated as a trade or business.

Section 141(c) provides that an issue

meets the private loan financing test if

the amount of the proceeds of the issue

that are to be used (directly or indirectly)

to make or finance loans (other than certain loans described in paragraph (c)(2))

to persons other than governmental units

exceeds the lesser of five percent of such

proceeds or $5,000,000.

Section 141(e) defines a “qualified

bond” as any private activity bond if such

bond is: an exempt facility bond as defined

in § 142, a qualified mortgage bond as

defined in § 143(a), a qualified veterans’

mortgage bond as defined in § 143(b), a

qualified small issue bond as defined in

§ 144(a), a qualified student loan bond as

defined in § 144(b), a qualified redevelopment bond as defined in § 144(c), or

a qualified 501(c)(3) bond as defined in

§ 145. A qualified bond must also meet

the requirements of § 146 relating to volume cap and certain other requirements in

§ 147.

Under § 148(a), the term “arbitrage

bond” means any bond issued as part of

an issue any portion of the proceeds of

which are reasonably expected at the

time of issuance to be used (or is intentionally used after issuance) to acquire

higher yielding investments or to replace

funds that were used directly or indirectly

to acquire higher yielding investments.

Under § 148(b), “higher yielding investments” means investment property with

a yield that is materially higher than the

yield on the issue of which the bond is a

part.

Unless otherwise specified, all “Section” or “§” references are to sections of the Code.

Bulletin No. 2026–6

487

February 2, 2026

Section 149 generally enumerates certain additional requirements for a bond to

qualify as tax-exempt under § 103(a). Section 149(b) generally provides that, subject to certain exceptions, § 103(a) does

not apply to any State or local bond if

such bond is federally guaranteed. For this

purpose, a bond is federally guaranteed if:

(A) the payment of principal or interest

with respect to such bond is guaranteed

(in whole or in part) by the United States

(or any agency or instrumentality thereof);

(B) such bond is issued as part of an issue

and five percent or more of the proceeds

of such issue is to be (i) used in making

loans the payment of principal or interest

with respect to which is to be guaranteed

(in whole or in part) by the United States

(or any agency or instrumentality thereof),

or (ii) invested (directly or indirectly) in

federally insured deposits or accounts; or

(C) the payment of principal or interest on

such bond is otherwise indirectly guaranteed (in whole or in part) by the United

States (or an agency or instrumentality

thereof).

Section 149(c)(1) provides that, except

as provided in paragraph (c)(2), no interest on any bond shall be exempt from taxation under the Code unless such interest

is exempt from taxation under the Code

without regard to any provision of law that

is not contained in the Code and that is not

contained in a revenue Act.

Section 149(c)(2)(A) provides that for

purposes of the Code, notwithstanding

any provision of §§ 141 through 150, any

bond the interest on which is exempt from

taxation under the Code by reason of any

provision of law (other than a provision of

the Code) that is in effect on January 6,

1983, shall be treated as a bond described

in § 103(a).

Section 149(c)(2)(B) provides that

paragraph (c)(2)(A) shall not apply to a

bond (not described in paragraph (c)(2)

(C)) issued after 1983 if the appropriate

requirements of §§ 141 through 150 (or

the corresponding provisions of prior law)

are not met with respect to such bond.

Section 149(c)(2)(C) provides that

bonds issued under or pursuant to three

specific statutory provisions are treated

as described in section 149(c)(2)(A). Sec-

2

tion 149(c)(2)(C)(ii) provides that a bond

is described in paragraph (c)(2)(C) (and

treated as described in paragraph (c)(2)

(A)) if such bond is issued pursuant to

§ 608(a)(6)(A) of the Railroad Act, as in

effect on October 22, 1986, the date of

the enactment of the Tax Reform Act of

1986, Public Law 99-514, 100 Stat. 2085

(1986).

Section 150 contains definitions and

special rules that are used for purposes of

applying the requirements of §§ 103 and

141 through 149.

The Railroad Act as in Effect on October

22, 1986

Section 602(4) of the Railroad Act, as

in effect on October 22, 1986,2 states that

the transfer of the railroad and provision

for its operation by the State in the manner contemplated by §§ 601 through 616

of the Railroad Act is made pursuant to

the Federal goal and ongoing program of

transferring appropriate activities to the

States.

Section 608(a)(1) of the Railroad Act

provides in part that, after the date of transfer to the State pursuant to § 604 of the

Railroad Act, the “State-owned railroad”

shall be a rail carrier engaged in interstate and foreign commerce subject to the

jurisdiction of the Interstate Commerce

Commission under chapter 105 of subtitle

IV of title 49, United States Code, and all

other Acts applicable to rail carriers subject to that chapter. Section 603(14) of the

Railroad Act defines “State-owned railroad” as the authority, agency, corporation

or other entity which the State designates

or contracts with to own, operate or manage the rail properties of the railroad or, as

the context requires, the railroad owned,

operated, or managed by such authority,

agency, corporation, or other entity.

Section 608(a)(2) of the Railroad Act

provides in part that the transfer to the

State authorized by § 604 of the Railroad

Act and the conferral of jurisdiction to the

Interstate Commerce Commission pursuant to § 608(a)(1) of the Railroad Act are

intended to confer upon the State-owned

railroad all business opportunities available to comparable railroads.

Section 608(a)(6)(A) of the Railroad

Act states:

After the date of transfer, continued

operation of the Alaska Railroad by a

public corporation, authority or other

agency of the State shall be deemed to

be an exercise of an essential governmental function, and revenue derived

from such operation shall be deemed to

accrue to the State for the purposes of

section 115(a)(1) of the Internal Revenue Code of 1954 (26 U.S.C. 115(a)(1).

Obligations issued by such entity shall

also be deemed obligations of the State

for the purposes of section 103(a)(1) of

the Internal Revenue Code of 1954 (26

U.S.C. 103(a)(1)), but not obligations

within the meaning of section 103(b)

(2) of the Internal Revenue Code of

1954 (26 U.S.C. 103(b)(2)).

Section 609(a) of the Railroad Act

provides that the State or State-owned

railroad may request the Secretary of the

Interior or the Secretary of Agriculture,

as appropriate under law, to expeditiously

approve an application for a right-of-way

in order that the State-owned railroad may

have access across federal lands for transportation and related purposes.

Section 610(b) of the Railroad Act provides that, if the State discontinues use of

any land within the right-of-way (defined

as an area extending a certain distance on

both sides of the center line of any main

line or branch line of the railroad), the

State’s interest in such land shall revert

to the United States. For this purpose, the

State shall be considered to have discontinued use when, among other circumstances, the State has made no use of the

land for a continuous period of eighteen

years for transportation, communication,

or transmission purposes.

Internal Revenue Code of 1954

Section 103(a)(1) of the Internal Revenue Code of 1954 (1954 Code), as in

effect from the date of enactment of the

Railroad Act until the date of enactment

of the Tax Reform Act of 1986, provided

that gross income does not include interest

References to the Railroad Act in the balance of this notice are to the Railroad Act as in effect on October 22, 1986.

February 2, 2026

488

Bulletin No. 2026–6

on the obligations of a State, a Territory,

or possession of the United States, or any

political subdivision of any of the foregoing, or of the District of Columbia.

Section 103(b)(2) of the 1954 Code, as

in effect from the date of enactment of the

Railroad Act until the date of enactment

of the Tax Reform Act of 1986, defined

an “industrial development bond” as any

obligation (A) which is issued as part of

an issue all or a major portion of the proceeds of which are to be used directly or

indirectly in any trade or business carried

on by any person who is not an exempt

person, and (B) the payment of the principal or interest on which (under the terms

of such obligation or any underlying

arrangement) is, in whole or in major part,

(i) secured by any interest in property used

or to be used in a trade or business or in

payments in respect of such property, or

(ii) to be derived from payments in respect

of property, or borrowed money, used or

to be used in a trade or business.

Section 103 of the 1954 Code, as

in effect immediately prior to the date

of enactment of the Tax Reform Act of

1986, imposed additional requirements

on tax-exempt bonds, including rules in

§ 103(c) of the 1954 Code related to arbitrage bonds and rules in § 103(h) of the

1954 Code related to federally guaranteed

bonds.

Under the Tax Reform Act of 1986,

§§ 103 and 103A of the 1954 Code were

recodified into §§ 103 and 141 through

150 of the Code. Section 103(a)(1) of the

1954 Code was recodified into § 103(a)

of the Code. Section 103(b) of the 1954

Code (defining and governing industrial

development bonds) was recodified into

§§ 141 through 147 of the Code (defining and governing private activity bonds).

Section 103(c) of the 1954 Code (defining and governing arbitrage bonds) was

recodified into § 148 of the Code. Section

103(h) of the 1954 Code (defining and

governing federally guaranteed bonds)

was recodified into § 149(b) of the Code.

ANALYSIS

Under § 149(c)(1), except as provided

in § 149(c)(2)(A), a bond is not tax-exempt unless the exemption is derived from

the Code without regard to any provision

of law that is not contained in the Code

Bulletin No. 2026–6

and that is not contained in a revenue act

(Non-Code Provision). Under § 149(c)

(2)(A), a bond that is tax-exempt by reason of a Non-Code Provision in effect

on January 6, 1983, is treated as a State

or local bond that is tax-exempt under §

103(a). Under § 149(c)(2)(B), the beneficial treatment provided in § 149(c)(2)(A)

generally does not apply to a bond issued

after 1983, unless the bond is described in

§ 149(c)(2)(C). Bonds “issued pursuant to

section 608(a)(6)(A)” of the Railroad Act,

a Non-Code Provision enacted after January 6, 1983, are described in § 149(c)(2)

(C)(ii) and thus are treated as described in

§ 149(c)(2)(A). Consequently, § 149(c)(2)

(C)(ii) makes clear that even though the

Railroad Act was enacted after January 6,

1983, bonds issued pursuant to § 608(a)

(6)(A) of the Railroad Act are nonetheless

covered by § 149(c)(2)(A) and not subject

to the issue date limitation in § 149(c)(2)

(B).

The phrase “pursuant to” in § 149(c)(2)

(C)(ii) signals that the content of § 608(a)

(6)(A) of the Railroad Act circumscribes

the nature of bonds to which § 149(c)(2)

(C)(ii) applies. Under § 608(a)(6)(A) of

the Railroad Act, bonds issued by “a public corporation, authority or other agency

of the State” that is engaged in “the continued operation of the [State Railroad]” are

“obligations of the State for the purposes

of section 103(a)(1) of the Internal Revenue Code of 1954 (26 U.S.C. 103(a)(1)),

but not obligations within the meaning of

section 103(b)(2) of the Internal Revenue

Code of 1954 (26 U.S.C. 103(b)(2)).”

The Railroad Corporation is a public

corporation formed by State statute to

operate the State Railroad. The Railroad

Act contemplates that operation of the

State Railroad entails operating as “a rail

carrier engaged in interstate and foreign

commerce” (§ 608(a)(1) of the Railroad

Act), engaging in “all business opportunities available to comparable railroads”

(§ 608(a)(2) of the Railroad Act), deploying the State Railroad’s assets for “transportation and related purposes” (§ 609(a)

of the Railroad Act), and for “transportation, communication, or transmission

purposes” (§ 610(b) of the Railroad Act).

To the extent the Railroad Corporation

engages in activities consistent with and

related to the operation of the State Railroad as contemplated by the Railroad

489

Act, the Railroad Corporation is an entity

described in § 608(a)(6)(A) of the Railroad Act.

Therefore, under § 608(a)(6)(A) of the

Railroad Act, bonds issued by the Railroad

Corporation for purposes consistent with

and related to the operation of the State

Railroad as contemplated by the Railroad

Act (Railroad-Related Bonds) are obligations of the State for purposes of § 103(a)

(1) of the 1954 Code and are not industrial

development bonds under § 103(b)(2) of

the 1954 Code or private activity bonds

under § 141(a) of the Code. Railroad-Related Bonds are also “issued pursuant to

section 608(a)(6)(A)” of the Railroad Act

within the meaning of § 149(c)(2)(C)(ii)

and, therefore, under § 149(c)(2)(A), are

treated as tax-exempt under § 103(a), notwithstanding any failure to comply with

the rules in §§ 141 through 147 governing

private activity bonds. Because § 608(a)

(6)(A) of the Railroad Act exempts Railroad-Related Bonds only from the rules

in §§ 141 through 147 governing private

activity bonds, Railroad-Related Bonds

must still satisfy the rules in §§ 148, 149,

and 150 to qualify as tax-exempt bonds

under § 103(a).

In connection with the LNG Project, the Railroad Corporation intends to

engage in activities to finance the construction, acquisition, and improvement

of the Property. Because the Railroad Corporation’s engagement in these activities

is consistent with and related to the operation of the State Railroad as contemplated

by the Railroad Act, the bonds issued by

the Railroad Corporation to finance the

construction, acquisition, and improvement of the Property are Railroad-Related

Bonds and are not required to satisfy the

rules in §§ 141 through 147 to qualify as

tax-exempt bonds under § 103(a). This

conclusion is limited to bonds issued by

the Railroad Corporation to finance the

construction, acquisition, and improvement of the Property, all of which must

be located within the State and directly

related to the LNG Project. For example,

this conclusion would not apply if the

Railroad Corporation were to issue bonds

to finance construction of a facility that

uses natural gas generated by the LNG

Project but has no other relationship to the

LNG Project because such a facility does

not qualify as Property.

February 2, 2026

HOLDING

Because financing the construction,

acquisition, and improvement of the Property constitutes an activity consistent with

and related to the operation of the State

Railroad as contemplated by the Railroad

Act, bonds issued by the Railroad Corpo-

February 2, 2026

ration to finance the construction, acquisition, and improvement of the Property

are not required to satisfy the rules in §§

141 through 147 to qualify as tax-exempt

bonds under § 103(a). However, such

bonds are required to satisfy the rules in

§§ 148, 149, and 150 to qualify as tax-exempt bonds under § 103(a).

490

DRAFTING INFORMATION

The principal author of this revenue

ruling is the Office of the Associate Chief

Counsel (Financial Institutions and Products). For further information regarding

this revenue ruling, call (202) 317-3900

(not a toll-free number).

Bulletin No. 2026–6

Part III

Interim Guidance on

Additional First Year

Depreciation Deduction

under § 168(k)

Notice 2026-11

SECTION 1. OVERVIEW

This notice announces that the

Department of the Treasury (Treasury

Department) and the Internal Revenue

Service (IRS) intend to issue proposed

regulations (forthcoming proposed regulations) that would implement the additional first year depreciation deduction

under § 168(k) of the Internal Revenue

Code (Code)1, as amended by §§ 70301

and 70434(g) of Public Law 119-21,

139 Stat. 72 (July 4, 2025), commonly

known as the One, Big, Beautiful Bill

Act (OBBBA), including proposed regulations that would modify § 1.168(k)-2

to include applicable qualified sound

recording productions commencing in

taxable years ending after July 4, 2025.

The Treasury Department and IRS expect

the forthcoming proposed regulations to

be consistent with the interim guidance

provided in sections 3 through 5 of this

notice. Section 3 of this notice addresses

property eligible for the additional

first year depreciation deduction under

§ 168(k) as amended by the OBBBA.

Section 4 of this notice addresses the

elections under § 168(k)(5) and (10).

Section 5 of this notice addresses the

addition of qualified sound recording

productions to qualified property under

§ 168(k)(2) for productions commencing in taxable years ending after July 4,

2025. Section 6 of this notice addresses

the expected applicability date of the

forthcoming proposed regulations and

the ability of taxpayers to rely on the

interim guidance provided in this notice

for property placed in service in taxable years beginning before the date the

forthcoming proposed regulations are

published in the Federal Register.

1

SECTION 2. BACKGROUND

.01 Section 168(k) prior to amendment

by the OBBBA. Section 168(k)(1), as in

effect after amendment by § 13201 of Public Law 115-97, 131 Stat. 2054 (Dec. 22,

2017), commonly known as the Tax Cuts

and Jobs Act (TCJA) (TCJA § 168(k)),

allows an additional first year depreciation deduction, based on the applicable

percentage under TCJA § 168(k)(6) for

qualified property acquired after September 27, 2017, and placed in service before

January 1, 2027 (January 1, 2028, for certain property having longer production

periods and certain aircraft), and for specified plants planted or grafted after September 27, 2017, and before January 1,

2027, for which a section 168(k)(5) election is made. The applicable percentage

under TCJA § 168(k)(6) was 100 percent

for qualified property placed in service, or

specified plants planted or grafted, after

September 27, 2017, and before January

1, 2023, and has phased down by 20 percentage points annually beginning with

qualified property acquired after September 27, 2017, and placed in service after

December 31, 2022 (December 31, 2023,

for certain property having longer production periods or certain aircraft), and specified plants planted or grafted after December 31, 2022. Pursuant to TCJA § 168(k)

(6), the applicable percentage is (i) 40 percent for qualified property placed in service during 2025 (60 percent for certain

property having longer production periods

or certain aircraft) and (ii) 40 percent for

specified plants planted or grafted during

2025.

.02 Amendments made by the OBBBA.

(1) Amendments to § 168(k) by § 70301

of the OBBBA. Section 70301 of the

OBBBA (OBBBA § 70301) made several

amendments to § 168(k) to provide taxpayers with a permanent 100 percent additional first year depreciation deduction for

qualified property acquired and placed in

service, and specified plants planted or

grafted, after January 19, 2025. Specifically, OBBBA § 70301: (i) removed the

general requirement that qualified prop-

erty must be placed in service, and specified plants must be planted or grafted,

before January 1, 2027, (ii) removed the

requirement that certain property having

longer production periods or certain aircraft must be placed in service before January 1, 2028, and acquired before January

1, 2027, (iii) removed the provision specifying that the requirement that certain

property having longer production periods and certain aircraft be acquired before

January 1, 2027 is treated as met if the taxpayer begins manufacturing, constructing,

or producing self-constructed property

before January 1, 2027, and (iv) replaced

the annual phasedown of the applicable

percentage for the § 168(k) additional

first year depreciation deduction with a

permanent 100 percent additional first

year depreciation deduction for qualified

property acquired, or specified plants

planted or grafted, after January 19, 2025.

Additionally, OBBBA § 70301 amended

§ 168(k)(10) to allow taxpayers to elect to

deduct 40 percent (60 percent for certain

property having longer production periods

or certain aircraft), instead of 100 percent,

additional first year depreciation for qualified property placed in service, or specified plants planted or grafted, during the

first taxable year ending after January 19,

2025.

OBBBA § 70301(c) provides that,

except as otherwise provided in that subsection, the amendments made by OBBBA

§ 70301 apply to property acquired, or

specified plants planted or grafted, after

January 19, 2025. OBBBA § 70301(c)(4)

contains language similar to § 13201(h)(1)

of the TCJA, stating that for purposes of

the effective date in OBBBA § 70301(c)

(1), property is not treated as acquired

after the date a written binding contract is

entered into for such acquisition.

(2) Amendments to §§ 181 and 168(k)

made by § 70434 of the OBBBA.

(a) Amendments to § 181(a) made by

§ 70434 of the OBBBA. Section 181, as in

effect prior to amendment by § 70434 of

the OBBBA (OBBBA § 70434), allows

taxpayers to elect to deduct up to $15 million of the aggregate production costs of

Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).

Bulletin No. 2026–6

491

February 2, 2026

any qualified film, television or live theatrical production commencing before January 1, 2026, but did not allow a deduction

for sound recording productions. OBBBA

§ 70434(a) and (b) amended § 181(a) and

(g) (redesignated as § 181(h)) to allow

taxpayers to deduct the cost of any qualified sound recording production, subject

to a cap on the aggregate cost of any qualified sound recording production, or on

the aggregate, cumulative cost of all

such qualified sound recording productions in the taxable year, of $150,000, for

productions commencing before January 1, 2026, in taxable years ending after

July 4, 2025. Following the amendments

by OBBBA § 70434(e), § 181(f) defines

“qualified sound recording production” as

a sound recording, as defined in 17 U.S.C.

101, produced and recorded in the United

States.

(b) OBBBA § 70434(g) amendments to

§ 168(k). OBBBA § 70434(g) amended

§ 168(k) by expanding the definition of

qualified property in § 168(k)(2) to include

qualified sound recording productions

for which a deduction would have been

allowable under § 181, without regard to

§ 181(a)(2) and (h) (respectively, the limitation on deductible aggregate production

costs and the termination date for § 181) or

§ 168(k). OBBBA § 70434(g)(2) amended

§ 168(k)(2)(H) to provide that a qualified

sound recording production is considered

placed in service at the time of the initial

release or broadcast.

(c) Effective date of OBBBA § 70434

amendments. OBBBA § 70434(i) provides that the amendments to § 168(k) and

§ 181 made by OBBBA § 70434 apply to

sound recording productions commencing

in taxable years ending after July 4, 2025,

the date of enactment of the OBBBA.

.03 Existing regulations under § 168(k).

(1) In general. Section 1.168(k)-2,

published in the Federal Register as T.D.

9874 (84 FR 50108) on September 24,

2019, and amended by T.D. 9916 (85 FR

71734) on November 10, 2020, provides

rules for determining whether certain

depreciable property is qualified property

eligible for the additional first year depreciation deduction under TCJA § 168(k).

Section 1.168(k)-2(h)(1) provides that, in

general, the rules in § 1.168(k)‑2 apply

to (i) depreciable property acquired after

September 27, 2017, and placed in ser-

February 2, 2026

vice during or after the taxpayer’s taxable year that begins on or after January

1, 2021, (ii) specified plants planted, or

grafted to a plant that was previously

planted, during or after the taxpayer’s

taxable year that begins on or after January 1, 2021, for which an election under

§ 168(k)(5) was made, and (iii) components of eligible larger self-constructed

property that are acquired or self-constructed after September 27, 2017, and

placed in service by the taxpayer during

or after the taxpayer’s taxable year that

begins on or after January 1, 2021. Section 1.1502-68 provides rules governing

the availability of the additional first year

depreciation deduction allowable under

TCJA § 168(k) for depreciable property acquired and placed in service after

September 27, 2017, by a member of a

consolidated group. Except as otherwise

provided in § 1.1502-68(c), the rules in

§ 1.168(k)-2 apply to depreciable property acquired by members of a consolidated group in addition to the rules in

§ 1.1502-68.

(2) Section 1.168(k)-2(b)(5) acquisition date requirement.

(a) In general. Section 1.168(k)-2(b)

(5) provides rules for the acquisition date

requirement in § 13201(h) of the TCJA,

which provides that the amendments made

by § 13201 of the TCJA apply to property

which is acquired, or planted or grafted,

after September 27, 2017, and is placed in

service after such date. Under § 13201(h)

of the TCJA, property is not treated as

acquired after the date on which a written binding contract is entered into for

such acquisition. Section 1.168(k)-2(b)(5)

states that these rules apply to all depreciable property, including self-constructed

property, certain property having longer

production periods, and certain aircraft.

Pursuant to § 1.168(k)‑2(b)(5)(ii)(A),

except for qualified film, television, or live

theater productions, depreciable property

will meet the acquisition date requirement

if the property is acquired by the taxpayer

after September 27, 2017, or is acquired

by the taxpayer pursuant to a written binding contract entered into by the taxpayer

after September 27, 2017.

(b) Written binding contracts. Section

1.168(k)-2(b)(5)(ii)(B) provides that the

acquisition date of property that the taxpayer acquired pursuant to a written bind-

492

ing contract is the later of: (i) the date the

contract was entered into; (ii) the date the

contract is enforceable under State law;

(iii) if the contract has one or more cancellation periods, the date all cancellation

periods end; or (iv) if the contract has one

or more contingency clauses, the date all

conditions subject to such clauses are satisfied.

Section 1.168(k)-2(b)(5)(iii) defines a

written binding contract for purposes of

§ 1.168(k)-2(b)(5) as a contract enforceable under State law against the taxpayer

or a predecessor that does not limit damages to a specified amount (for example,

by use of a liquidated damages provision).

Additionally, property that is manufactured, constructed, or produced for the

taxpayer by another person pursuant to

a written binding contract that is entered

into prior to the manufacture, construction

or production of the property for use by

the taxpayer in its trade or business or for

its production of income is considered to

be self-constructed property subject to the

written binding contract rules provided in

§ 1.168(k)-2(b)(5)(iv).

(c) Self-constructed property. Section 1.168(k)-2(b)(5)(iv) provides rules

to determine the acquisition date for

self-constructed property for purposes of

§ 1.168(k)‑2(b)(5). In general, self-constructed property meets the acquisition

date requirement in § 1.168(k)-2(b)(5)(ii)

if the taxpayer (or third party) begins manufacture, construction, or production after

September 27, 2017.

Section 1.168(k)-2(b)(5)(iv)(B) provides that manufacture, construction, or

production of property begins when physical work of a significant nature begins.

The determination of when physical work

of a significant nature begins depends

on the facts and circumstances. Section

1.168(k)-2(b)(5)(iv)(B)(2) provides a

safe harbor allowing physical work of a

significant nature to begin at the time the

taxpayer incurs (in the case of an accrual

basis taxpayer) or pays (in the case of a

cash basis taxpayer) more than 10 percent

of the total cost of the property, excluding

the cost of any land and preliminary activities such as planning or designing, securing financing, exploring, or researching.

(d) Property acquired pursuant

to a non-binding contract. Section

1.168(k)‑2(b)(5)(v) provides the rules

Bulletin No. 2026–6

for determining the acquisition date for

property acquired pursuant to a non-binding contract. In general, the acquisition

date for property acquired pursuant to a

non-binding contract (and property constructed for the taxpayer by another person under a non-binding contract) is the

date the taxpayer paid or incurred more

than 10 percent of the total cost of the

property, excluding the cost of any land

and preliminary activities.

(e) Acquisition date requirement for

qualified film, television, or live theatrical

productions. Section 1.168(k)-2(b)(5)(vi)

provides that, for purposes of § 13201(h)

of the TCJA: (i) a qualified film or television production is treated as acquired

on the date principal photography commences, and (ii) a qualified live theatrical

production is treated as acquired on the

date when all the necessary elements for

producing the live theatrical production

are secured.

(f)

Specified

plants.

Section

1.168(k)-2(b)(5)(vii) provides that a

specified plant meets the acquisition date

requirement of § 1.168(k)-2(b)(5)(ii) if

it is planted or grafted after September

27, 2017, by the taxpayer in the ordinary

course of the taxpayer’s farming business

(as defined in § 263A(e)(4)).

(3) Component election. Section

1.168(k)-2(c)(1) allows a taxpayer to

make an election to treat any acquired

or self-constructed component, as

described in § 1.168(k)-2(c)(3), of larger

self-constructed property, as described in

§ 1.168(k)-2(c)(2), for which the taxpayer

begins the manufacture, construction, or

production before September 28, 2017, as

being eligible for the additional first year

depreciation deduction, if the component

is qualified property under § 168(k)(2)

and § 1.168(k)-2, and the taxpayer either

acquires or begins the manufacture, construction, or production of the component

after September 27, 2017. The rules and

procedures for making the component

election are set forth in § 1.168(k)‑2(c)

(6) and provide that the taxpayer must

attach a statement to the timely filed return

(including extensions) for the taxable year

in which the taxpayer placed in service

the larger self-constructed property indicating: (i) that the taxpayer is making

the election in § 1.168(k)-2(c), and (ii)

whether the taxpayer is making the elec-

Bulletin No. 2026–6

tion for all or some of the components

described in § 1.168(k)‑2(c)(3).

.04 Section 168(k)(5) election.

(1) TCJA § 168(k)(5). TCJA § 168(k)

(5)(A) allows a taxpayer to make an

election to deduct additional first year

depreciation for one or more specified

plants planted by January 1, 2027, or

grafted before such date to a plant that

has already been planted by the taxpayer

in the ordinary course of the taxpayer’s

farming business (as defined in § 263A(e)

(4) (TCJA § 168(k)(5) election). If a taxpayer makes the TCJA § 168(k)(5) election, the additional first year depreciation

deduction is allowable for the specified

plant in the taxable year in which that

plant was planted or grafted, subject to

the applicable percentage phase down

requirements in TCJA § 168(k)(6)(C).

The rules and procedures for making

the TCJA § 168(k)(5) election are set

forth in § 1.168(k)‑2(f)(2) and provide

that the taxpayer makes the election in

the manner prescribed on Form 4562,

“Depreciation and Amortization,” and its

instructions. The instructions to the current Form 4562 provide generally that a

taxpayer makes the election by attaching

a statement to the timely filed Federal tax

return (including extensions) for the taxable year the taxpayer planted or grafted

the specified plant to which the election

applies indicating the taxpayer is electing

to apply TCJA § 168(k)(5) and identifying the specified plant(s) for which the

taxpayer is making the election.

(2) OBBBA § 70301 amendments to

§ 168(k)(5). For specified plants planted

or grafted after January 19, 2025, OBBBA

§ 70301(a)(4) and (b) removed the applicable percentage phase down in § 168(k)

(6) and amended § 168(k)(5) by (i) eliminating the date by which a specified plant

must be planted or grafted by the taxpayer

under § 168(k)(5)(A), and (ii) adding a

permanent 100 percent additional first

year depreciation deduction for specified

plants for which the taxpayer makes a

§ 168(k)(5) election for the taxable year.

.05 Section 168(k)(7) election. Section 168(k)(7) (which the OBBBA does

not amend) allows a taxpayer to make

an election not to deduct additional first

year depreciation for any class of property (a term defined in § 1.168(k)-2(f)(1)

(ii)) that is qualified property placed in

493

service during the taxable year. The rules

and procedures for making the election

not to deduct additional first year depreciation are set forth in § 1.168(k)-2(f)(1)

and provide that the taxpayer makes the

election in the manner prescribed on Form

4562, “Depreciation and Amortization,”

and its instructions. The instructions to the

current Form 4562 generally provide that

the taxpayer makes the election by attaching a statement to its timely filed Federal

tax return (including extensions) for the

taxable year in which the property at issue

is placed in service indicating the class of

property for which the taxpayer is making the election and that, for such class,

the taxpayer is not claiming the additional

first year depreciation.

.06 Section 168(k)(10) election.

(1) TCJA § 168(k)(10). TCJA § 168(k)

(10) allowed taxpayers to elect to deduct

50 percent, instead of 100 percent, additional first year depreciation for (i) all

qualified property acquired by the taxpayer

after September 27, 2017, and placed in

service by the taxpayer in its taxable year

that includes September 28, 2017, and

(ii) all specified plants that are planted,

or grafted to a plant that has already been

planted, after September 27, 2017, by the

taxpayer in the ordinary course of the of

the taxpayer’s farming business during

its taxable year that includes September

28, 2017 (TCJA § 168(k)(10) election).

The rules and procedures for making the

TCJA § 168(k)(10) election are set forth in

§ 1.168(k)-2(f)(3), which provides that the

taxpayer makes the election in the manner prescribed on the 2017 Form 4562,

“Depreciation and Amortization,” and its

instructions. Those instructions provide

that the taxpayer makes the election by

attaching a statement to the timely filed

Federal tax return (including extensions)

for the taxable year that includes September 28, 2017, indicating the taxpayer is

electing to apply TCJA § 168(k)(10).

(2) OBBBA § 70301 amendments to

§ 168(k)(10). OBBBA § 70301(b)(3)

amended § 168(k)(10) to allow taxpayers

to elect to deduct 40 percent (60 percent

for certain property having longer production periods or certain aircraft), instead of

100 percent, for qualified property placed

in service or plants planted or grafted, as

applicable, by the taxpayer during its first

taxable ending after January 19, 2025.

February 2, 2026

SECTION 3. INTERIM GUIDANCE

.01 Purpose. This section 3 provides

interim guidance for determining whether

depreciable property is qualified property eligible for the additional first year

depreciation deduction under § 168(k), as

amended by the OBBBA, and for determining the additional first year depreciation deduction allowable under § 168(k),

as amended by the OBBBA. The Treasury

Department and IRS intend to issue forthcoming proposed regulations consistent

with the interim guidance provided in this

section 3.

.02 In general. Except as otherwise

provided in this notice, to determine

whether depreciable property is qualified property eligible for the § 168(k)

additional first year depreciation deduction for property acquired, or specified

plants planted or grafted, after January

19, 2025, and to determine the associated § 168(k) additional first year depreciation deduction, a taxpayer applies

rules consistent with the rules contained in §§ 1.168(k)-2 and 1.1502-68,

with the substitutions and modifications

described in this notice.

.03 Acquisition date requirement

in OBBBA § 70301(c). In determining

whether depreciable property is acquired

after January 19, 2025, for purposes of

OBBBA § 70301(c), taxpayers apply rules

consistent with § 1.168(k)-2(b)(5) and

1.1502-68(a) through (d), by substituting

“January 19, 2025” for “September 27,

2017” each place it appears, and by substituting “January 20, 2025” for “September

28, 2017” each place it appears.

.04 Property described in § 168(k)(2)

(B) or (C). Because OBBBA § 70301(a)

(2)(A) removed the requirement under

TCJA § 168(k)(2)(B)(i)(III) and (C)(i)

that certain long production period property must be acquired by the taxpayer

(or acquired pursuant to a written binding contract entered into) before January

1, 2027, in order to be qualified property, § 1.168(k)-2(d) (providing rules for

determining if such qualified property is

acquired before January 1, 2027) does not

apply in determining whether such property is qualified property under § 168(k),

as amended by the OBBBA.

.05 Certain components of larger

self-constructed property.

February 2, 2026

(1) In general. A taxpayer may make

an election under rules consistent with

§ 1.168(k)-2(c), by substituting “January 19, 2025” and “January 20, 2025”

for “September 27, 2017” and “September 28, 2017”, respectively, to treat an

eligible component of an eligible larger

self-constructed property as eligible for

the additional first year depreciation

deduction under § 168(k), as amended by

the OBBBA (component election). The

eligible component must satisfy all the

requirements set forth in § 1.168(k)-2(c).

(2) Making the component election.

A taxpayer makes the component election provided in section 3.05(1) of this

notice by following rules and procedures consistent with those described in

§ 1.168(k)-2(c)(6).

.06 Placed in service date requirement.

Because OBBBA § 70301(a) removed

the § 168(k)(2)(A)(iii), (B)(i)(II), (C)(i)

and (k)(5)(A) requirements that qualified

property must be placed in service before

January 1, 2027 (January 1, 2028, for certain property having longer production

periods and certain aircraft), and a specified plant must be planted, or grafted

to a plant that has already been planted,

before January 1, 2027, § 1.168(k)-2(b)(4)

(relating to placed-in-service dates) does

not apply for purposes of determining

whether depreciable property acquired,

or plants planted or grafted (for which the

taxpayer made the § 168(k)(5) election),

after January 19, 2025, is qualified property under § 168(k).

.07 Applicable percentage. In applying

§ 168(k) to qualified property acquired,

and specified plants planted or grafted

(for which the taxpayer made the § 168(k)

(5) election), after January 19, 2025, substitute “100 percent” for “the applicable percentage” each place it appears in

§ 1.168(k)-2, except for the examples provided in § 1.168(k)-2(g)(2)(iv).

SECTION 4. SECTION 168(k)(5) AND

(10) ELECTIONS

.01 Purpose. This section 4 provides

interim guidance for making the elections

provided in § 168(k)(5) and (10), for qualified property placed in service or plants

planted or grafted, as applicable, after

January 19, 2025, the effective date for

the amendments to § 168(k) by OBBBA

494

§ 70301. The Treasury Department and

IRS intend to issue forthcoming proposed

regulations consistent with the interim

guidance provided in this section 4.

.02 Section 168(k)(5) election. A taxpayer makes the § 168(k)(5) election

by following rules and procedures consistent with the rules and procedures in

§ 1.168(k)-2(f)(2).

.03 Section 168(k)(10) election. A

taxpayer makes the § 168(k)(10) election by following rules and procedures

consistent with the rules and procedures

in § 1.168(k)-2(f)(3), with the following

modifications: (a) substitute “January 19,

2025” for “September 27, 2017” each

place it appears, (b) substitute “January

20, 2025” for “September 28, 2017” each

place it appears, (c) substitute “40 percent” (“60 percent” in the case of qualified property described in § 168(k)(2)

(B) or (C)) for “50 percent” each place

it appears, and (d) substitute “applicable

Form 4562, Depreciation and Amortization,” for “2017 Form 4562, “Depreciation and Amortization,”.”

SECTION 5. QUALIFIED SOUND

RECORDING PRODUCTIONS

.01 Purpose. This section 5 provides

interim guidance relating to certain treatment of qualified sound recording productions under § 168(k) following the

amendments made by OBBBA § 70434.

The Treasury Department and IRS intend

to issue forthcoming proposed regulations

consistent with the interim guidance provided in this section 5.

.02 Qualified sound recording productions as qualified property.

(1) Qualified sound recording production acquired before January 20, 2025.

In applying § 168(k) to a qualified sound

recording production acquired before January 20, 2025, and in a taxable year ending after July 4, 2025, a taxpayer applies

§ 1.168(k)-2 by adding to the list of qualified property described in § 1.168(k)-2(b)

(2)(i) “a qualified sound recording production (as defined in § 181(f)) for which

a deduction would have been allowable

under § 181 without regard to § 181(a)(2)

or (h) or § 168(k)).”

(2) Qualified sound recording productions acquired after January 19, 2025.

A qualified sound recording production

Bulletin No. 2026–6

described in § 168(k)(2)(A)(i)(VI), commencing in a taxable year ending after

July 4, 2025, and acquired, as determined

under section 5.03(1) of this notice, after

January 19, 2025, is qualified property eligible for the additional first year depreciation deduction under § 168(k), as amended

by the OBBBA.

.03 Acquisition date requirement and

placed in service date for qualified sound

recordings.

(1) Acquisition date requirement in

OBBBA § 70301(c). In determining when

a qualified sound recording production is

acquired for purposes of the effective date

rules in OBBBA § 70301(c), a qualified

sound recording production is treated as

acquired on the date that principal recording commences.

(2) Placed in service date. For purposes of determining the additional first

year depreciation deduction for a qualified sound recording production under §

168(k), a qualified sound recording production is considered placed in service at

the time of its initial release or broadcast

under § 168(k)(2)(H)(iii).

.04 Election not to deduct additional

first year depreciation for a qualified

sound recording production. A taxpayer

may make an election under § 168(k)(7)

not to deduct additional first year depreciation for a qualified sound recording

production using rules and procedures

consistent with the rules and procedures in § 1.168(k)-2(f)(1), with the

modification that the definition of class

of property in § 1.168(k)-2(f)(1)(ii) is

expanded to include each separate production, defined using rules consistent

with § 1.181-3(b), of a qualified sound

recording production.

SECTION 6. APPLICABILITY DATE

AND RELIANCE

.01 Applicability date. It is anticipated

that the forthcoming proposed regulations

will propose rules consistent with the

rules described in sections 3 through 5 of

this notice for property:

(a) that is placed in service in a taxable

year beginning on or after the date the

final regulations are published in the Federal Register, and

(b) that is (i) depreciable property

acquired by the taxpayer after January 19,

Bulletin No. 2026–6

2025 (or, in the case of a qualified sound

recording production, a production commencing in a taxable year ending after July

4, 2025), (ii) specified plants for which

taxpayers properly made the § 168(k)(5)

election that are planted, or grafted to a

plant that was previously planted, after

January 19, 2025, and (iii) components

acquired or self-constructed after January

19, 2025, of larger self-constructed property described in § 1.168(k)-2(c)(2), with

the substituted dates in section 3.05 of this

notice.

.02 Reliance on this notice. A taxpayer may rely on the guidance provided in sections 3 through 5 of this

notice for the property described in section 6.01(b) of this notice that is placed

in service in a taxable year beginning

before the date the forthcoming proposed regulations are published in the

Federal Register, provided that the taxpayer follows the guidance provided in

sections 3 through 5 of this notice in its

entirety for all eligible property placed

in service in such taxable years, beginning with the first taxable year with

respect to which the taxpayer relies

on the guidance provided in sections 3

through 5 of this notice.

SECTION 7. PAPERWORK

REDUCTION ACT

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501-3520) (PRA) generally

requires that a federal agency obtain the

approval of the Office of Management and

Budget (OMB) before collecting information from the public, whether such

collection of information is mandatory,

voluntary, or required to obtain or retain

a benefit. An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a valid control number

assigned by the OMB.

The collections of information in this

notice are in sections 3.02, 3.05, 4.02, and

4.03 of this notice.

The collection in section 3.02 of this

notice is an election under § 1.150268(c)(4) that a taxpayer may make to not

claim the additional first year depreciation deduction for qualified property, and

which § 1.1502-68(c)(1) or (2) would

otherwise require the taxpayer to claim

495

such deduction when a member of a consolidated group acquires from another

member property eligible for the additional first year depreciation deduction

(or stock of a third member holding such

property), and the acquirer member (and

acquired member, if applicable) then

leaves the consolidated group. The corporation makes the election by attaching

a statement to its timely filed Federal

income tax return (including extensions)

for the taxable year that begins after the

date on which it leaves the consolidated

group. The likely respondents are corporations.

The collection in section 3.02 of this

notice also allows a taxpayer to make a

§ 168(k)(7) election not to deduct additional first year depreciation for a qualified

sound recording production under § 168(k)

(7). A taxpayer makes the election by following the rules in § 1.168(k)-2(f)(1),

which requires that the election be made

by the due date, including extensions, of

the Federal tax return for the taxable year

in which the qualified property is placed in

service by the taxpayer in the instructions

for Form 4562. The likely respondents are

businesses and individuals.

The collection in section 3.05 of this

notice is an election that allows a taxpayer

to treat one or more components acquired

or self-constructed after January 19, 2025,

of certain larger self-constructed property as being eligible for the 100 percent

additional first year depreciation deduction under § 168(k). See § 1.168(k)-2(c)

(6). The election is made by attaching a

statement to a Federal income tax return

indicating that the taxpayer is making

the election under § 1.168(k)-2(c) and

whether the election is for all or some of

the components. The likely respondents

are businesses and individuals.

The collection in section 4.02 of this

notice is an election in § 168(k)(5) that

allows a taxpayer to deduct additional first

year depreciation for one or more specified plants which is planted or grafted

after January 19, 2025. A taxpayer makes

the election by following § 1.168(k)‑2(f)

(2), which requires a statement to be

attached to the timely filed Federal tax

return (including extensions) for the taxable year the taxpayer planted or grafted

the specified plant, and follow the manner

of making the election in the instructions

February 2, 2026

for Form 4562, Depreciation and Amortization (Including Information on Listed

Property). The likely respondents are

businesses and individuals.

The collection in section 4.03 of

this notice allows a taxpayer to make a

§ 168(k)(10) election to deduct 40 percent (60 percent for certain property having longer production periods or certain

aircraft), instead of 100 percent, additional first year depreciation for all qualified property acquired by the taxpayer

after January 19, 2025, (or, in the case

of specified plants, grafted or planted)

and placed in service by the taxpayer

in its taxable year that includes January

20, 2025. A taxpayer makes the § 168(k)

(10) election by following the rules in

§ 1.168(k)‑2(f)(3), which requires a

statement attached to the timely filed

Federal tax return (including extensions)

for the taxable year that includes January 20, 2025, and in the manner provided

in the instructions for Form 4562. The

likely respondents are businesses and

individuals.

This information requested in sections

3.02, 3.05, 4.02, and 4.03 of this notice

will be used by the IRS to identify the

taxpayer, taxable year, the subject of the

election (such as, transaction (section

3.02 of the notice) or components (section 3.05 of the notice), and property

subject to the election (such as specified

plant(s) (section 4.02 of this notice) or

class of property (section 4.03 of this

notice).

The burden associated with these information collections will be included within

OMB control numbers 1545-0047 for

tax-exempt filers, 1545-0074 for individual filers, 1545-0092 for trust and estate

filers, and 1545-0123 for business filers

in accordance with the PRA procedures

under 5 CFR 1320.10.

Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any internal

revenue law. Generally, tax returns and

tax return information are confidential, as

required by 26 U.S.C. 6103.

SECTION 8. DRAFTING AND

CONTACT INFORMATION

The principal author of this notice is

Christian Lagorio of the Office of Associate Chief Counsel (Income Tax and

Accounting). For further information

regarding this notice, contact Mr. Lagorio

at (202) 317-7005 (not a toll-free number).

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

Notice 2026-12

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the

Internal Revenue Code. In addition, this

notice provides guidance as to the interest rate on 30-year Treasury securities

under § 417(e)(3)(A)(ii)(II) as in effect for

plan years beginning before 2008 and the

30-year Treasury weighted average rate

under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to single-employer plans (except for CSEC plans

under § 414(y)) pursuant to § 412. Section

430(h)(2) specifies the interest rates that

must be used to determine a plan’s target

normal cost and funding target. Under

this provision, present value is generally

determined using three 24-month average

interest rates (“segment rates”), each of

which applies to cash flows during speci-

fied periods. To the extent provided under

§ 430(h)(2)(C)(iv), these segment rates

are adjusted by the applicable percentage

of the 25-year average segment rates for

the period ending September 30 of the

year preceding the calendar year in which

the plan year begins.1 However, an election may be made under § 430(h)(2)(D)

(ii) to use the monthly yield curve in place

of the segment rates.

Section 1.430(h)(2)-1(d) provides

rules for determining the monthly corporate bond yield curve,2 and § 1.430(h)

(2)-1(c) provides rules for determining

the 24-month average corporate bond

segment rates used to compute the target

normal cost and the funding target. Consistent with the methodology specified in

§ 1.430(h)(2)-1(d), the monthly corporate

bond yield curve derived from December 2025 data is in Table 2025-12 at the

end of this notice. The spot first, second,

and third segment rates for the month of

December 2025 are, respectively, 4.03,

5.17, and 6.11.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i)

through (iii) must be adjusted pursuant to

§ 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. Those percentages are

95% and 105% for plan years beginning

in 2024, 2025 and 2026. For this purpose,

any 25-year average segment rate that is

less than 5% is deemed to be 5%. The

25-year average segment rates for plan

years beginning in 2024, 2025 and 2026

were published in Notice 2023-66, 202340 I.R.B. 992, Notice 2024-67, 2024-41

I.R.B. 726 and Notice 2025-47, 2025-40

I.R.B. 441, respectively.

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate

bond segment rates applicable for January

2026 without adjustment for the 25-year

average segment rate limits are as follows:

Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount

of the full funding limitation under § 433(c)(7)(C)).

2

For months before February 2024, the monthly corporate bond yield curve was determined in accordance with Notice 2007-81, 2007-44 I.R.B. 899. Section 1.430(h)(2)-1(d) generally adopts

the methodology for determining the monthly corporate bond yield curve under Notice 2007-81 but includes two enhancements to take into account subsequent changes in the bond market.

Those enhancements are described in the preamble to TD 9986 (89 FR 2127).

1

February 2, 2026

496

Bulletin No. 2026–6

Applicable Month

January 2026

24-Month Average Segment Rates Without 25-Year Average Adjustment

First Segment

Second Segment

Third Segment

4.57

5.26

5.74

The adjusted 24-month average segment rates set forth in the chart below

reflect § 430(h)(2)(C)(iv) of the Code. The

24-month averages applicable for January

2026, adjusted to be within the applicable

minimum and maximum percentages of

the corresponding 25-year average segment rates in accordance with § 430(h)(2)

(C)(iv), are as follows:

Adjusted 24-Month Average Segment Rates

For Plan Years

Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2024

January 2026

4.75

5.26

5.74

2025

January 2026

4.75

5.26

5.74

2026

January 2026

4.75

5.25

5.74

30-YEAR TREASURY SECURITIES

INTEREST RATES

Section 431 specifies the minimum

funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum

amount for the full-funding limitation

described in § 431(c)(6)(A), based on the

plan’s current liability. Section 431(c)

(6)(E)(ii)(I) provides that the interest

rate used to calculate current liability for

this purpose must be no more than 5 percent above and no more than 10 percent

below the weighted average of the rates

of interest on 30-year Treasury securities during the four-year period ending

on the last day before the beginning of

the plan year. Notice 88-73, 1988-2 C.B.

383, provides guidelines for determining the weighted average interest rate.

The rate of interest on 30-year Treasury

securities for December 2025 is 4.80

percent. The Service determined this

rate as the average of the daily determinations of yield on the 30-year Treasury

bond maturing in November 2055. For

plan years beginning in January 2026,

the weighted average of the rates of

interest on 30-year Treasury securities

and the permissible range of rates used

to calculate current liability are as follows:

For Plan Years Beginning In

Treasury Weighted Average Rates

30-Year Treasury Weighted Average

Permissible Range 90% to 105%

January 2026

4.36

3.93 to 4.58

under § 417(e)(3)(D) are segment rates

computed without regard to a 24-month

average. Section 1.417(e)-1(d)(3) provides guidelines for determining the

minimum present value segment rates.

Pursuant to that section, the minimum

present value segment rates determined

for December 2025 are as follows:

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

December 2025

Minimum Present Value Segment Rates

First Segment

Second Segment

4.03

5.17

DRAFTING INFORMATION

The principal author of this notice

is Tom Morgan of the Office of Associ-

Bulletin No. 2026–6

ate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

497

Third Segment

6.11

of this guidance. For further information

regarding this notice, contact Mr. Morgan

at 202-317-6700 or Tony Montanaro at

626-927-1475 (not toll-free calls).

February 2, 2026

Table 2025-12

Monthly Yield Curve for December 2025

Derived from December 2025 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

3.86

3.89

3.92

3.95

3.99

4.03

4.09

4.14

4.20

4.27

4.34

4.41

4.48

4.55

4.62

4.69

4.76

4.83

4.89

4.95

5.01

5.07

5.13

5.18

5.23

5.28

5.32

5.37

5.41

5.45

5.49

5.52

5.55

5.59

5.62

5.65

5.67

5.70

5.72

5.75

February 2, 2026

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

5.77

5.79

5.80

5.82

5.84

5.85

5.87

5.88

5.89

5.90

5.91

5.92

5.93

5.94

5.95

5.96

5.97

5.98

5.99

6.00

6.01

6.02

6.03

6.04

6.04

6.05

6.06

6.07

6.08

6.08

6.09

6.10

6.10

6.11

6.12

6.12

6.13

6.14

6.14

6.15

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

6.15

6.16

6.16

6.17

6.17

6.18

6.18

6.19

6.19

6.20

6.20

6.21

6.21

6.21

6.22

6.22

6.23

6.23

6.23

6.24

6.24

6.24

6.25

6.25

6.25

6.26

6.26

6.26

6.27

6.27

6.27

6.27

6.28

6.28

6.28

6.29

6.29

6.29

6.29

6.30

498

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

6.30

6.30

6.30

6.31

6.31

6.31

6.31

6.31

6.32

6.32

6.32

6.32

6.33

6.33

6.33

6.33

6.33

6.34

6.34

6.34

6.34

6.34

6.34

6.35

6.35

6.35

6.35

6.35

6.35

6.36

6.36

6.36

6.36

6.36

6.36

6.36

6.37

6.37

6.37

6.37

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

6.37

6.37

6.37

6.38

6.38

6.38

6.38

6.38

6.38

6.38

6.38

6.39

6.39

6.39

6.39

6.39

6.39

6.39

6.39

6.40

6.40

6.40

6.40

6.40

6.40

6.40

6.40

6.40

6.40

6.41

6.41

6.41

6.41

6.41

6.41

6.41

6.41

6.41

6.41

6.41

Bulletin No. 2026–6

Safe Harbor

Explanations – Eligible

Rollover Distributions

Notice 2026‑13

I. PURPOSE

This notice provides two safe harbor

explanations that plan administrators may

use to satisfy the requirement under section 402(f) of the Internal Revenue Code

(Code) to provide certain information to

recipients of eligible rollover distributions. One safe harbor explanation is for

distributions that are not from a designated

Roth account, and the other safe harbor

explanation is for distributions from a designated Roth account. These safe harbor

explanations modify the two safe harbor

explanations provided in Notice 2020‑62,

2020‑35 IRB 476. The modifications to

the safe harbor explanations take into

consideration certain legislative changes

made by Division T of the Consolidated

Appropriations Act, 2023, Pub. L. 117328, 136 Stat. 4459 (2022), known as the

SECURE 2.0 Act of 2022 (SECURE 2.0

Act), and implement a recommendation

from the U.S. Government Accountability

Office (GAO).

II. BACKGROUND

A. Section 402(f)

Section 402(f) requires the plan administrator of a plan qualified under section 401(a) to provide the written explanation described in section 402(f)(1)

(section 402(f) notice) to any recipient of

an eligible rollover distribution, as defined

in section 402(c)(4). In addition, section 403(a)(4)(B) requires the plan administrator of a section 403(a) plan to provide

the section 402(f) notice to any recipient

of an eligible rollover distribution, section

457(e)(16)(B) requires the plan administrator of a governmental section 457(b)

plan1 to provide the section 402(f) notice

to any recipient of an eligible rollover

distribution, and section 403(b)(8)(B)

1

requires a payor under a section 403(b)

plan to provide the section 402(f) notice

to any recipient of an eligible rollover distribution.

Section 1.402(f)‑1, Q&A‑1(a), provides that the plan administrator of a qualified plan is required, within a reasonable

period of time before making an eligible

rollover distribution, to provide the distributee with the section 402(f) notice.

Notice 2020‑62 sets forth two safe harbor explanations that may be used to satisfy the requirements for a section 402(f)

notice based on the relevant law as of

August 6, 2020: one safe harbor explanation is for payments not from a designated

Roth account and the other safe harbor

explanation is for payments from a designated Roth account. Notice 2020‑62 provides, however, that those two safe harbor explanations will not satisfy section

402(f) to the extent the explanations are

no longer accurate because of a change in

the relevant law occurring after August 6,

2020.

B. Recent Statutory Changes Related

to Distributions

1. Section 72(t)

Section 72(t)(1) generally provides for

a 10% additional tax on the portion of a

distribution from a qualified retirement

plan (as defined in section 4974(c)) that

is includible in gross income, unless the

distribution qualifies for one of the exceptions in section 72(t)(2).

a. Distributions for Emergency Personal

Expenses

Section 115 of the SECURE 2.0 Act

amended section 72(t)(2) of the Code by

adding section 72(t)(2)(I), which provides

a new exception to the 10% additional

tax for a distribution from an applicable

eligible retirement plan to an individual

for emergency personal expenses. For

a description of the rules relating to the

exception to the 10% additional tax for

emergency personal expense distributions

and the optional adoption of emergency

personal expense distribution provisions,

see Notice 2024‑55, 2024-28 IRB 31.

Section 72(t)(2)(I)(viii) generally provides that the special rules in section 72(t)

(2)(H)(vi)(II) (for qualified birth or adoption distributions) also apply for emergency personal expense distributions.

Thus, an emergency personal expense distribution is not treated as an eligible rollover distribution for purposes of the direct

rollover rules of section 401(a)(31), the

notice requirement under section 402(f),

or the mandatory withholding rules under

section 3405.

b. Certain Distributions to Qualified

Public Safety Employees and

Private‑Sector Firefighters

Prior to the enactment of the SECURE

2.0 Act, section 72(t)(10)(A) of the Code

provided that, in the case of a distribution

to a qualified public safety employee (as

defined in section 72(t)(10)(B)) from a

governmental plan (as defined in section

414(d)), the exception to the 10% additional tax in section 72(t)(2)(A)(v) (relating to separation from service) is applied

by substituting age 50 for age 55. The

SECURE 2.0 Act made changes to the

exception to the 10% additional tax for

qualified public safety employees in section 72(t)(10). Sections 308 and 329 of

the SECURE 2.0 Act modified the exception to the 10% additional tax under section 72(t)(10) of the Code by providing

that the exception applies to a distribution either from a governmental plan to a

qualified public safety employee or from

a qualified plan, section 403(a) annuity,

or section 403(b) plan to a private‑sector

employee who provides firefighting services, if the distribution is received after

the employee’s separation from service

and the earlier of the attainment of age 50

or 25 years of service under the plan. In

addition, section 330 of the SECURE 2.0

Act amended section 72(t)(10)(B)(i) of the

Code by adding State or local correction

officers and forensic security employees

providing for the care, custody, and control of forensic patients to the definition of

qualified public safety employee.

A governmental section 457(b) plan is an eligible section 457(b) plan maintained by a governmental employer described in section 457(e)(1)(A).

Bulletin No. 2026–6

499

February 2, 2026

c. Distributions to Domestic Abuse

Victims

Section 314 of the SECURE 2.0 Act

amended section 72(t)(2) of the Code by

adding section 72(t)(2)(K), which provides a new exception to the 10% additional tax for an eligible distribution to

a domestic abuse victim (domestic abuse

victim distribution). For a description of

the rules relating to the exception to the

10% additional tax for domestic abuse

victim distributions and the optional

adoption of domestic abuse victim distribution provisions, see Notice 2024‑55.

Section 72(t)(2)(K)(vi)(II) provides that

a domestic abuse victim distribution is

not treated as an eligible rollover distribution for purposes of the direct rollover

rules of section 401(a)(31), the notice

requirement under section 402(f), or the

mandatory withholding rules under section 3405.

d. Distributions to Terminally Ill

Individuals

Section 326 of the SECURE 2.0 Act

amended section 72(t)(2) of the Code by

adding a new exception to the 10% additional tax for distributions made to a terminally ill individual. Section 72(t)(2)(L)

provides that an employee who is a terminally ill individual and receives a distribution (terminally ill individual distribution)

on or after the date on which the employee

has been certified by a physician as having a terminal illness will not be subject

to the 10% additional tax with respect to

the distribution. For a description of the

rules relating to the exception to the 10%

additional tax for terminally ill individual

distributions, see Part F of Notice 2024‑2,

2024‑2 IRB 316. A terminally ill individual distribution is an eligible rollover

distribution for purposes of the direct rollover rules of section 401(a)(31), the notice

requirement under section 402(f), and the

mandatory withholding rules under section 3405.

Although section 72(t)(2)(L) provides

an exception to the 10% additional tax, it

does not provide an exception from the

distribution restriction requirements in

sections 401(k)(2)(B)(i), 403(b)(7)(A)

(i), and 403(b)(11). Therefore, a plan that

is subject to these distribution restric-

February 2, 2026

tion requirements may only make a terminally ill individual distribution to an

employee who is otherwise eligible for

a permissible distribution. For example,

a section 401(k) plan may distribute a

terminally ill individual distribution to

an employee who is otherwise eligible

for a permissible distribution and meets

the requirements of that permissible distribution, such as a distribution after the

employee separates from service, without violating the distribution restriction

requirements under section 401(k)(2)

(B)(i). For the distribution to also meet

the requirements of a terminally ill individual distribution, the distribution must

meet the applicable requirements in

Notice 2024‑2, for a terminally ill individual distribution, including the content

requirement for the certification described

in Q&A F‑6, the timing requirement for

the certification described in Q&A F‑7,

and the documentation requirement

described in Q&A F‑13 of Notice 2024‑2.

In the example above, when distributing

the terminally ill individual distribution, the plan administrator of the section 401(k) plan would need to provide

a section 402(f) notice for the separated

employee requesting a terminally ill individual distribution.

e. Qualified Disaster Recovery

Distributions

Section 331 of the SECURE 2.0 Act

amended section 72(t) of the Code by

(1) adding section 72(t)(2)(M), which

provides a new exception to the 10%

additional tax for any qualified disaster

recovery distribution, and (2) adding section 72(t)(11), which provides additional

rules related to qualified disaster recovery

distributions. Section 72(t)(11)(A) and

(B) permits an individual whose principal place of abode at any time during the

incident period of a qualified disaster is

located in the qualified disaster area and

who has sustained an economic loss by

reason of the qualified disaster to receive

a distribution of up to $22,000 (a qualified disaster recovery distribution) on or

after the first day of the incident period of

the qualified disaster and before the date

that is 180 days after the applicable date

with respect to the disaster. A qualified

disaster is defined in section 72(t)(11)(E)

500

as any disaster with respect to which a

major disaster has been declared by the

President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, Pub. L. 100‑707,

102 Stat. 4689 (1988), after December

27, 2020. The term applicable date is

defined in section 72(t)(11)(F)(iii) as the

latest of December 29, 2022 (the date of

enactment of section 72(t)(11)(F)), the

first day of the incident period (as specified by the Federal Emergency Management Agency) with respect to the qualified disaster, or the date of the disaster

declaration with respect to the qualified

disaster. Section 72(t)(11)(G)(i) provides

that a qualified disaster recovery distribution is not treated as an eligible rollover

distribution for purposes of the direct

rollover rules of section 401(a)(31), the

notice requirement under section 402(f),

or the mandatory withholding rules under

section 3405.

For a description of the rules relating to

the exception to the 10% additional tax for

qualified disaster recovery distributions

and the optional adoption of qualified

disaster recovery distribution provisions,

see IRS Fact Sheet 2024‑19, Disaster

relief frequently asked questions: Retirement plans and IRAs under the SECURE

2.0 Act of 2022 (IR‑2024‑132, May 3,

2024).

f. Distributions from Pension‑Linked

Emergency Savings Accounts

Section 127(e)(2) of the SECURE 2.0

Act amended section 72(t)(2) of the Code

by adding section 72(t)(2)(J), which provides that the 10% additional tax does

not apply to distributions from a pension-linked emergency savings account

(PLESA) pursuant to section 402A(e).

See section II.B.3.c of this notice for a

general description of PLESAs, including the application of section 402(f)

notice requirements to PLESA distributions.

g. Qualified Long-Term Care

Distributions

Section 334 of the SECURE 2.0 Act

amended section 72(t)(2) of the Code by

adding section 72(t)(2)(N) to provide a

new exception to the 10% additional tax

Bulletin No. 2026–6

for qualified long-term care distributions,

which are generally distributions made

to an employee during the taxable year

to pay for certified long-term care insurance for the employee or the employee’s

spouse. Section 334 of the SECURE 2.0

Act also added section 401(a)(39) of the

Code, which provides that a trust forming part of a qualified defined contribution plan will not be treated as failing to

constitute a qualified trust solely because

the plan permits qualified long-term care

distributions, if certain requirements are

met.2 Section 334 of the SECURE 2.0 Act

is effective for distributions made after

December 29, 2025.

Section 72(t)(2)(N)(iii) provides that a

qualified long-term care distribution is not

treated as an eligible rollover distribution

for purposes of the direct rollover rules of

section 401(a)(31), the notice requirement

under section 402(f), or the mandatory

withholding rules under section 3405.

2. Required Minimum Distributions

Section 401(a)(9) establishes a mandatory date, known as the “required beginning date,” by which required minimum

distributions to a plan participant must

start. Under section 402(c)(4)(B), required

minimum distributions are not eligible

rollover distributions.

a. Applicable Ages for Required

Minimum Distributions

Section 107 of the SECURE 2.0 Act

amended section 401(a)(9) of the Code

to increase the ages at which required

minimum distributions must begin. Section 401(a)(9)(C)(i) provides that the

required beginning date for required minimum distributions is April 1 of the calendar year following the later of (I) the calendar year in which the employee attains

the applicable age, or (II) the calendar

year in which the employee retires. Section 401(a)(9)(C)(v) provides that, (I) in

the case of an individual who attains age

72 after December 31, 2022, and age 73

before January 1, 2033, the applicable age

is 73, and (II) in the case of an individual who attains age 74 after December 31,

2032, the applicable age is 75.

b. Required Minimum Distributions Not

Required from Designated Roth Account

in a Plan

Section 325 of the SECURE 2.0 Act

amended section 402A(d) of the Code by

adding section 402A(d)(5), which provides that neither required minimum distributions under section 401(a)(9)(A) nor

the incidental death benefit requirements

of section 401(a) apply to any designated

Roth account in a plan.

c. Surviving Spouse Election to Be

Treated as Employee

Section 327 of the SECURE 2.0 Act

amended the special rule for the surviving spouse of an employee under section 401(a)(9)(B)(iv) of the Code. Under

section 401(a)(9)(B)(iv), if the designated

beneficiary in section 401(a)(9)(B)(iii)(I)

is the surviving spouse of the employee

and the surviving spouse will be taking

annual distributions over a period of longer than 10 years, then those distributions

are not required to start until the year in

which the employee would have attained

the applicable age. If the surviving spouse

dies before required minimum distributions to the surviving spouse begin, favorable required minimum distribution rules

in section 401(a)(9)(B)(iii) would apply

as if the surviving spouse is the employee.

In addition, a surviving spouse may

elect to be treated as if the surviving

spouse were the employee for purposes of

determining the amount of each required

minimum distribution. If this election

is made, then the surviving spouse may

take distributions over a longer number of

years than the surviving spouse’s remaining life expectancy. If this election is not

made, required minimum distributions

will be made over the life of the surviving spouse (or over a period not extending

beyond the life expectancy of the surviving spouse).

3. Other Statutory and Regulatory

Changes Related to Distributions

a. Mandatory Distributions

Section 304 of the SECURE 2.0 Act

increased from $5,000 to $7,000 the

dollar thresholds related to distributions

under sections 411(a)(11) and 401(a)(31)

(B) of the Code. Section 411(a)(11) generally permits plans qualified under section 401(a) to include provisions allowing

for the immediate distribution of a separating participant’s benefit without such

participant’s consent if the present value

of the nonforfeitable accrued benefit does

not exceed $7,000 (mandatory distributions). Plans may provide that amounts

attributable to previous rollovers into the

plan are excluded for purposes of determining whether the present value of the

nonforfeitable accrued benefit does not

exceed $7,000.

If a distributee does not make an affirmative election to have a mandatory distribution of more than $1,000 paid from

a plan qualified under section 401(a)3

in a direct rollover to an eligible retirement plan or to receive the distribution

directly, section 401(a)(31)(B) requires

that such mandatory distribution be paid

in a direct rollover to an individual retirement plan, i.e., an individual retirement

account as described in section 408(a) or

an individual retirement annuity described

in section 408(b) (IRA), of a designated

trustee or issuer. Section 401(a)(31)(B)(i)

requires that the plan administrator notify

the distributee in writing (either separately

or as part of the section 402(f) notice) that

the distribution may be paid in a direct

rollover to an IRA.

b. Distributions from Governmental

Plans to Eligible Retired Public Safety

Officers for Health and Long-Term Care

Insurance

Section 402(l) provides special rules

regarding distributions from governmental

plans to eligible retired public safety officers for health and long-term care insur-

Qualified long-term care distributions are also permitted from section 401(k) plans pursuant to section 401(k)(2)(B)(i)(VII), qualified annuity contracts pursuant to section 403(a)(6), section 403(b) custodial accounts pursuant to section 403(b)(7)(A)(i)(VII), section 403(b) annuity contracts pursuant to section 403(b)(11)(E), and governmental section 457(b) plans pursuant

to section 457(d)(1)(A)(v).

3

The mandatory distribution rules in section 401(a)(31)(B) also apply to 403(b) plans pursuant to section 403(b)(10) and governmental section 457(b) plans pursuant to section 457(d)(1)(C).

2

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501

February 2, 2026

ance. Section 402(l)(1) provides that, in

general, in the case of an employee who is

an eligible retired public safety officer and

who makes an election under section 402(l)

(6) with respect to any taxable year, the

employee’s gross income for that taxable

year does not include any distribution from

an eligible retirement plan to the extent

that the aggregate amount of the distributions does not exceed the amount paid by

the employee for qualified health insurance premiums for the taxable year. Section 402(l)(2) limits the amount that may

be excluded from gross income for the taxable year under section 402(l)(1) to $3,000.

Prior to the enactment of the SECURE

2.0 Act, section 402(l)(5)(A) of the Code

provided that insurance premiums may

be excluded from gross income only if

the payment of the premiums is made

directly to the provider of the accident or

health plan or qualified long-term insurance contract by deduction from a distribution from the retirement plan (the

direct payment requirement). As amended

by section 328 of the SECURE 2.0 Act,

section 402(l)(5)(A)(i) of the Code eliminates the direct payment requirement.

Instead, section 402(l)(5)(A)(i) provides

that the tax treatment under section 402(l)

(1) applies to a distribution without regard

to whether payment of the premiums is

made directly to the provider of the accident or health plan or qualified long-term

care insurance contract by deduction from

a distribution from the eligible retirement

plan, or is made to the employee.

c. Pension‑Linked Emergency Savings

Accounts

Section 127 of the SECURE 2.0 Act

amended title I of the Employee Retirement Income Security Act of 1974

(ERISA) and section 402A of the Code to

provide that certain retirement plans may

include PLESAs. In general, PLESAs are

short‑term savings accounts established

and maintained in connection with a

defined contribution plan and are treated

as a type of designated Roth account.

Section 402A(e)(10)(A) provides that

distributions from PLESAs generally are

not treated as eligible rollover distribu-

tions for purposes of section 402(f), except

as provided in section 402A(e)(10)(B).

Pursuant to section 402A(e)(10)(B), in the

case of termination of employment of the

participant or termination of the PLESA

by the plan sponsor, a distribution may be

transferred under section 402A(e)(8)(A)

(i)4 to another designated Roth account

in the defined contribution plan, and, if

so transferred, the distribution from the

PLESA is treated as an eligible rollover

distribution for purposes of section 402(f).

d. Collectibles

On July 19, 2024, the Treasury Department and the Internal Revenue Service

(IRS) published TD 10001 (89 FR 58886),

which sets forth final regulations under

section 401(a)(9) that, among other things,

updated the list of distributions and deemed

distributions that are not eligible rollover

distributions. Specifically, § 1.402(c)‑2(c)

(3)(x) provides that amounts treated as distributed as a result of the purchase of a collectible pursuant to section 408(m) are not

eligible rollover distributions.

C. Government Accountability Office

Report

On May 22, 2024, the GAO released a

report, titled 401(k) Retirement Plan Tax

Notices: Federal Actions Can Help Participants Understand Their Distribution

Options, GAO-24-107167 (GAO Report).

The GAO Report examines the effectiveness of section 402(f) notices in helping

participants understand their distribution

options and associated tax consequences.

The GAO Report made several recommendations to the Department of the

Treasury (Treasury Department) to mitigate the challenges section 401(k) plan

participants face regarding section 402(f)

notices. The GAO Report recommended

that the section 402(f) notices provide

clearer and more concise information

about each of the following four distribution options and their associated tax consequences: (1) leave their savings in their

former employer’s plan, (2) roll over their

savings into a plan sponsored by their new

employer in a plan‑to‑plan rollover, (3)

roll over their savings into an IRA, or (4)

take a lump‑sum distribution.

The GAO Report also recommended

that the Treasury Department address the

timing requirements for plans to provide

the section 402(f) notice to ensure the

section 402(f) notice is provided to participants when they leave their jobs and

become eligible to take distributions. The

GAO Report acknowledged that the Treasury Department informed the GAO that

there is no statutory authority to require a

section 402(f) notice to a participant upon

separation from service.

Under § 1.402(f)‑1, Q&A‑2(b), a

plan administrator may provide a participant with a section 402(f) notice earlier than is required (for example, upon

a participant’s separation from service).

Then, rather than providing the full section 402(f) notice a second time within the

required section 402(f) notice timeframe,

a plan administrator would be permitted to

provide the participant with a summary of

the section 402(f) notice within that timeframe. However, if the participant requests

the full section 402(f) notice after receiving the summary, the plan administrator

would need to provide the section 402(f)

notice without charge.

The Treasury Department and the IRS

encourage plan administrators to consider

implementing the GAO Report’s recommendation to provide the section 402(f) notice in

connection with a participant’s separation

from service under the options described in

§ 1.402(f)‑1, Q&A‑2(b), in order to provide

the participant with information about distribution options at the point in time when the

participant is facing an important decision

about retirement savings.

III. MODIFICATIONS TO THE SAFE

HARBOR EXPLANATIONS

Two updated safe harbor explanations are appended to this notice (see the

Appendix). The safe harbor explanations

modify the safe harbor explanations in

Notice 2020‑62 to reflect certain legislative changes made after August 6, 2020,

including: (1) various changes relating

to the exceptions under section 72(t)

(2) to the 10% additional tax under sec-

Under section 402A(e)(8)(A)(i), a participant may elect to transfer the PLESA account balance, in whole or in part, into another designated Roth account of the participant under the defined

contribution plan.

4

February 2, 2026

502

Bulletin No. 2026–6

tion 72(t)(1), (2) changes relating to the

required minimum distribution rules for

surviving spouses, (3) the increased age

for determining required beginning dates

for required minimum distributions under

section 401(a)(9), (4) the elimination

of required minimum distributions with

respect to designated Roth accounts in a

plan, (5) the increased dollar thresholds

related to small lump-sum distributions

under sections 411(a)(11) and 401(a)(31)

(B), (6) changes to the rules relating to

distributions from governmental plans for

health and long-term care insurance, and

(7) rules relating to PLESA distributions.

The safe harbor explanations also include

a paragraph setting forth the options generally available to plan participants receiving

eligible rollover distributions. As noted in

the GAO Report, providing clear and concise information will allow notice recipients to fully consider the implications of

their distribution options before they make

decisions about their plan savings. Finally,

the safe harbor explanations include other

minor modifications to improve clarity,

including a limitation on rollovers to SIMPLE IRA plans under section 408(p)(1)(B)

and a table of contents to help a recipient

easily identify information and topics that

are relevant to the recipient’s decision.

The updated safe harbor explanations

provided in this notice may be used by

plan administrators and payors to satisfy

section 402(f). The updated safe harbor

explanations will not, however, satisfy

section 402(f) to the extent the explanations are no longer accurate because of a

change in the relevant law occurring after

January 15, 2026. The IRS anticipates

updating the safe harbor explanations to

reflect relevant future changes, including

provisions of the SECURE 2.0 Act that

are not effective until taxable years beginning after December 31, 2026.5

The first safe harbor explanation reflects

the rules relating to distributions not from

a designated Roth account. Thus, the first

safe harbor explanation should be used

only if the participant is eligible to receive

an eligible rollover distribution that is not

from a designated Roth account. The second safe harbor explanation reflects the

rules relating to distributions from a desig-

nated Roth account. Thus, the second safe

harbor explanation should be used only if

the participant is eligible to receive an eligible rollover distribution from a designated

Roth account. Both explanations should be

provided to a participant if the participant is

eligible to receive eligible rollover distributions from both a designated Roth account

and an account other than a designated

Roth account.

The safe harbor explanation in this

notice for distributions not from a designated Roth account meets the requirements

of section 402(f) for an eligible rollover

distribution that is not from a designated

Roth account if it is provided to the recipient of the eligible rollover distribution

within a reasonable period of time before

the distribution is made. Similarly, the safe

harbor explanation in this notice for distributions from a designated Roth account

meets the requirements of section 402(f)

for an eligible rollover distribution from a

designated Roth account if it is provided to

the recipient of the eligible rollover distribution within a reasonable period of time

before the distribution is made.

Section 1.402(f)‑1, Q&A‑2, currently

provides, in general, that a reasonable

period of time for providing an explanation is no less than 30 days (subject to

waiver by the distributee) and no more

than 90 days before the date on which the

distribution is made. However, proposed

§ 1.402(f)‑1, Q&A‑2(a), pursuant to section 1102(a)(1)(B) of the Pension Protection Act of 2006, Pub. L. 109‑280, 120

Stat. 780, provides that a notice required

to be provided under section 402(f) may

be provided to a participant as much as

180 days before the date on which the distribution is made (or the annuity starting

date). The proposed regulations further

provide that, with respect to the extended

period for notices, plans may rely on the

proposed regulations for notices provided

during the period beginning on the first

day of the first plan year beginning on or

after January 1, 2007, and ending on the

effective date of final regulations. Thus,

the section 402(f) notice may be provided

as many as 180 days before the date on

which the distribution is made (or the

annuity starting date).

A plan administrator or payor may

customize a safe harbor explanation

by omitting any information that does

not apply to the plan, and the Treasury

Department and IRS encourage that

customization. For example, if the plan

does not hold after-tax employee contributions, it would be appropriate to

eliminate the section “If your payment

includes after-tax contributions” in the

explanation for payments not from a designated Roth account. Similarly, if the

plan does not provide for distributions of

employer stock or other employer securities, it would be appropriate to eliminate

the section “If your payment includes

employer stock that you do not roll

over.” Other information that may not be

relevant to a particular plan includes, for

example, the sections “If your payment is

from a governmental section 457(b) plan”

and “If you are an eligible retired public

safety officer and your payment is used

to pay for health coverage or qualified

long-term care insurance.” In addition,

the plan administrator or payor may provide additional information with a safe

harbor explanation if the information is

not inconsistent with section 402(f).

Alternatively, a plan administrator or

payor may satisfy section 402(f) by providing an explanation that is different

from a safe harbor explanation provided

in this notice. To satisfy section 402(f), an

explanation must include the information

required by section 402(f) and must be

written in a manner designed to be easily

understood.

IV. EFFECT ON OTHER

DOCUMENTS

Notice 2020‑62 is superseded.

DRAFTING INFORMATION

The principal authors of this notice are

Jordan D. Kohl and Christina M. Cerasale

of the Office of Associate Chief Counsel

(Employee Benefits, Exempt Organizations, and Employment Taxes). For further information regarding this notice,

contact Ms. Kohl at (312) 292‑2170 (not

a toll-free number).

The SECURE 2.0 Act includes the following provisions that are not effective until taxable years beginning after December 31, 2026: section 103 (adding Code section 6433, which provides

for Saver’s Match contributions) and section 309 (adding Code section 139C, which provides for the exclusion from income of certain disability-related qualified first responder retirement

payments).

5

Bulletin No. 2026–6

503

February 2, 2026

Appendix

For Payments Not From a

Designated Roth Account

YOUR OPTIONS FOR ELIGIBLE ROLLOVER DISTRIBUTIONS

You are receiving this notice because you are eligible to receive a payment from the [INSERT NAME OF PLAN] (the “Plan”) that

you can transfer (roll over) to an IRA or another employer plan. This notice is intended to help you decide whether to roll over the

payment (or some portion of it).

CONTENTS

GENERAL INFORMATION ABOUT ROLLOVERS

What can I do with an amount that is eligible for rollover?

How can a payment affect my taxes?

How can a rollover affect my taxes?

What types of retirement accounts and plans may accept my rollover?

How do I do a rollover?

How much may I roll over?

If I don’t do a rollover, will I have to pay the 10% additional tax on distributions before age 59½?

If I do a rollover to an IRA, will the 10% additional tax apply to a later distribution from the IRA before age 59½?

Will I owe state income taxes?

SPECIAL RULES AND OPTIONS

If your payment includes after-tax contributions

If you miss the 60-day rollover deadline

If your payment includes employer stock that you don’t roll over

If you have an outstanding loan that is being offset

If you receive a payment and you were born on or before January 1, 1936

If your payment is from a governmental section 457(b) plan

If you are an eligible retired public safety officer and your payment is used to pay for health coverage or qualified long-term care

insurance

If you roll over your payment to a SIMPLE IRA

If you roll over your payment to a Roth IRA

If you roll over your payment to a designated Roth account in the Plan

If you aren’t a Plan participant

If you are a nonresident alien

Other special rules

FOR MORE INFORMATION

GENERAL INFORMATION ABOUT ROLLOVERS

This notice describes the rollover rules that apply to payments from the Plan that are not from a designated Roth account (a type of

account in some employer plans that is subject to special tax rules). If you also receive a payment from a designated Roth account

in the Plan, you will be provided a different notice for that payment, and the Plan administrator or the payor will tell you the amount

that is being paid from each account.

Rules that apply to most payments from a plan are described in this “General Information About Rollovers” section. Special rules

that only apply in certain circumstances are described in the “Special Rules and Options” section, including rules if your Plan is a

governmental section 457(b) plan, you have after-tax contributions, or your benefit doesn’t exceed $7,000.

What can I do with an amount that is eligible for rollover?

When an amount payable (that is, an amount you are eligible to take as a payment from the Plan) is eligible for rollover, you generally

may choose some combination of the following:

February 2, 2026

504

Bulletin No. 2026–6

•

•

•

•

Leave it in the Plan, that is, do not take the payment,

Roll it over into another employer plan,

Roll it over into an IRA, or

Take it, don’t roll it over, and pay any required taxes.

Whether these options are available to you depends on your circumstances and the terms of the Plan. For example, you may be

required to take a payment (and not roll it over) based on your age or if your benefit is below a certain threshold.

How can a payment affect my taxes?

If you don’t do a rollover, you will be taxed on a payment from the Plan, and, if you are under age 59½, you will also have to pay a

10% additional tax (unless an exception applies).

How can a rollover affect my taxes?

If you do a rollover, you won’t have to pay tax until you receive payments later.

What types of retirement accounts and plans may accept my rollover?

You may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity) or an employer

plan (a tax-qualified plan (such as a section 401(k) plan), a section 403(b) plan, or a governmental section 457(b) plan) that will accept

the rollover. The rules of the IRA or employer plan that receives the rollover will determine your investment options, fees, and rights

to payment from the IRA or employer plan (for example, IRAs aren’t subject to spousal consent rules, and IRAs may not provide

loans). Further, the amount rolled over will become subject to the tax rules that apply to the IRA or employer plan. For additional

information on IRAs, see IRS Publication 590‑A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication

590‑B, Distributions from Individual Retirement Arrangements (IRAs).

How do I do a rollover?

There are two ways to do a rollover. You can do either a direct rollover or a 60‑day rollover.

If you do a direct rollover, the Plan will make the payment directly to your IRA or an employer plan. You should contact the IRA

provider or the administrator of the employer plan for information on how to do a direct rollover.

If you do a 60-day rollover, you will receive a payment from the Plan and then make a deposit into an IRA or eligible employer plan

that will accept it. Generally, you will have 60 days after you receive the payment to make the deposit. If you don’t do a direct rollover, the Plan is required to withhold 20% of the payment for federal income taxes (up to the amount of cash and property received

other than employer stock). This means that, in order to roll over the entire payment in a 60‑day rollover, you must use other funds

to make up for the amount withheld. If you don’t roll over the entire amount of the payment, the portion not rolled over will be taxed

and will be subject to the 10% additional tax on early distributions if you are under age 59½ (unless an exception applies).

How much may I roll over?

You may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except:

•

•

•

•

•

•

•

•

•

•

•

Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the joint lives or joint life

expectancies of you and your beneficiary);

Required minimum distributions;

Hardship distributions;

Payments of employee stock ownership plan (ESOP) dividends;

Corrective distributions of contributions that exceeded tax law limitations;

Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment ends);

Cost of life insurance paid by the Plan;

Payments of certain automatic enrollment contributions that you request to withdraw within 90 days of your first contribution;

Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP;

Distributions used to pay certain premiums for health and accident insurance; and

Amounts treated as distributed as a result of the purchase of a collectible.

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505

February 2, 2026

The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover.

If I don’t do a rollover, will I have to pay the 10% additional tax on distributions before age 59½?

If you are under age 59½, you will have to pay the 10% additional tax on early distributions for any payment from the Plan (including

amounts withheld for income tax) that you don’t roll over, unless one of the exceptions listed below applies. This tax applies to the

part of the distribution that you must include in income and is in addition to the regular income tax on the payment not rolled over.

The 10% additional tax doesn’t apply to the following payments from the Plan:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Payments made after you separate from service if you are at least age 55 in the year of the separation;

Payments that start after you separate from service if paid at least annually in substantially equal amounts over your life or life

expectancy (or the joint lives or joint life expectancies of you and your beneficiary);

Payments from a governmental plan made after you separate from service as a qualified public safety employee and, in the year

of separation, have reached age 50 or 25 years of service under the Plan;

Payments from a private‑sector plan made after you separate from service as a private‑sector firefighter and, in the year of separation, have reached age 50 or 25 years of service under the Plan;

Payments made due to disability;

Payments made after your death;

Payments of ESOP dividends;

Corrective distributions of contributions that exceed tax law limitations;

Cost of life insurance paid by the Plan;

Payments made directly to the government to satisfy a federal tax levy;

Payments made under a qualified domestic relations order (QDRO);

Payments from a defined contribution plan that are qualified birth or adoption distributions;

Payments from a defined contribution plan for purposes of meeting unforeseeable or immediate financial needs relating to personal or family emergency expenses (emergency personal expense distributions);

Payments to a victim of domestic abuse from a defined contribution plan that isn’t subject to the qualified joint survivor annuity

or qualified preretirement survivor annuity rules (domestic abuse victim distributions);

Payments after you receive a certification from a physician that you have a terminal illness (terminal illness distributions);

Payments that are qualified disaster recovery distributions;

Payments made from a defined contribution plan that are qualified long-term care distributions;

Payments up to the amount of your deductible medical expenses (without regard to whether you itemize deductions for the taxable year);

Certain payments made while you are on active duty if you were a member of a reserve component called to duty after September

11, 2001, for more than 179 days;

Payments of certain automatic enrollment contributions that you request to withdraw within 90 days of your first contribution;

Phased retirement payments made to federal employees; and

Payments from a pension-linked emergency savings account.

For more information about the 10% additional tax and the exceptions to the 10% additional tax, see IRS Publication 575, Pension

and Annuity Income, under the heading Tax on Early Distributions. For information on how to claim an exception, see the Instructions

for IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

If I do a rollover to an IRA, will the 10% additional tax apply to a later distribution from the IRA before age 59½?

If you receive a payment from an IRA when you are under age 59½, you will have to pay the 10% additional tax on early distributions

on the part of the payment that you must include in income, unless an exception applies. In general, the exceptions to the 10% additional tax for early distributions from an IRA are the same as the exceptions listed above for early distributions from a plan. However,

there are a few differences for payments from an IRA, including:

•

•

The exception for payments from a plan made after you separate from service if you are at least age 55 in the year of the separation (or the earlier of age 50 or attainment of 25 years of service under the Plan for qualified public safety employees and

private‑sector firefighters) doesn’t apply to payments from an IRA;

The exception for payments made pursuant to a QDRO under a plan doesn’t apply to an IRA (although a special rule applies

under which, as part of a divorce or separation agreement, a tax-free transfer may be made directly to an IRA of a spouse or

former spouse); and

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•

The exception for substantially equal periodic payments from a plan also applies to payments from an IRA but without regard to

whether you have had a separation from service.

Also, there are exceptions to the 10% additional tax that do not apply to payments from a plan but that do apply to payments from

an IRA, including:

•

•

•

Payments for qualified higher education expenses;

Payments up to $10,000 used in a qualified first-time home purchase; and

Payments for health insurance premiums after you have received unemployment compensation for 12 consecutive weeks (or

would have been eligible to receive unemployment compensation but for self‑employed status).

For more general information about the 10% additional tax and the exceptions to the 10% additional tax on payments from an IRA,

see the Instructions to IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. See

also, IRS Publication 590‑B, Distributions from Individual Retirement Arrangements (IRAs), under the heading Early Distributions.

Will I owe state income taxes?

This notice doesn’t address any state or local income tax rules (including withholding rules).

SPECIAL RULES AND OPTIONS

If your payment includes after‑tax contributions

After-tax contributions included in a payment aren’t taxed. If you receive a partial payment of your total benefit, an allocable portion

of your after-tax contributions is included in the payment, so you can’t take a payment of only after-tax contributions. However, if you

have pre‑1987 after‑tax contributions maintained in a separate account, a special rule may apply to determine whether the after‑tax

contributions are included in the payment. In addition, special rules apply when you do a rollover, as described below.

You may roll over to an IRA a payment that includes after-tax contributions through either a direct rollover or a 60‑day rollover. You

must keep track of the aggregate amount of the after-tax contributions in all of your IRAs (in order to determine your taxable income

for later payments from the IRAs). If you do a direct rollover of only a portion of the amount paid from the Plan and at the same time

the rest is paid to you, the portion rolled over consists first of the amount that would be taxable if not rolled over. For example, assume

you are receiving a payment of $12,000, of which $2,000 is after-tax contributions. In this case, if you directly roll over $10,000 to an

IRA that isn’t a Roth IRA, no amount is taxable because the $2,000 amount not rolled over is treated as being after-tax contributions.

If you do a direct rollover of the entire amount paid from the Plan to two or more destinations at the same time, you can choose which

destination receives the after-tax contributions.

Similarly, if you do a 60‑day rollover to an IRA of only a portion of a payment made to you, the portion rolled over consists first of

the amount that would be taxable if not rolled over. For example, assume you are receiving a payment of $12,000, of which $2,000

is after-tax contributions, and no part of the payment is directly rolled over. In this case, if you roll over $10,000 to an IRA that isn’t

a Roth IRA in a 60‑day rollover, no amount is taxable because the $2,000 amount not rolled over is treated as being after-tax contributions.

You may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a direct rollover (and

only if the receiving plan separately accounts for after-tax contributions and isn’t a governmental section 457(b) plan). You can do a

60‑day rollover to an employer plan of part of a payment that includes after-tax contributions, but only up to the amount of the payment that would be taxable if not rolled over.

If you miss the 60‑day rollover deadline

Generally, the 60‑day rollover deadline can’t be extended. However, the IRS has authority to waive the deadline under certain extraordinary circumstances, such as when external events prevented you from completing the rollover by the 60‑day rollover deadline.

Under certain circumstances, you may claim eligibility for a waiver of the 60‑day rollover deadline by making a written self-certification. Otherwise, to apply for a waiver from the IRS, you must file a private letter ruling request with the IRS. Private letter ruling

requests require the payment of a nonrefundable user fee. For more information, see IRS Publication 590‑A, Contributions to Individual Retirement Arrangements (IRAs), under the heading Rollovers.

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If your payment includes employer stock that you don’t roll over

If you don’t do a rollover, you can apply a special rule to payments of employer stock (or other employer securities) that are either

attributable to after-tax contributions or paid in a lump sum after separation from service (or after age 59½, disability, or the participant’s death). Under the special rule, the net unrealized appreciation on the stock won’t be taxed when distributed from the Plan

and will be taxed at capital gain rates when you sell the stock. Net unrealized appreciation is generally the increase in the value of

employer stock after it was acquired by the Plan. If you do a rollover to an IRA or an employer plan for a payment that includes

employer stock (for example, by selling the stock and rolling over the proceeds within 60 days of the payment), the special rule relating to the distributed employer stock won’t apply to any later payments from the IRA or, generally, the plan. The Plan administrator

can tell you the amount of any net unrealized appreciation.

If you have an outstanding loan that is being offset

If you have an outstanding loan from the Plan, your Plan benefit may be offset by the outstanding amount of the loan (offset amount),

typically when your employment ends. The offset amount is treated as a distribution to you at the time of the offset, even though you

will not receive the offset amount. Generally, you may roll over all or any portion of the offset amount using other funds. Any offset

amount that isn’t rolled over will be taxed (including the 10% additional tax on early distributions, unless an exception applies). You

may roll over offset amounts to an IRA or an employer plan (if the terms of the employer plan permit the plan to receive plan loan

offset rollovers).

How long you have to complete the rollover depends on what kind of plan loan offset you have. If you have a qualified plan loan

offset, you will have until your tax return due date (including extensions) for the tax year during which the offset occurs to complete

your rollover. A qualified plan loan offset occurs when a plan loan in good standing is offset because your employer plan terminates,

or because you separate from service. If your plan loan offset occurs for any other reason (such as a failure to make level loan repayments that results in a deemed distribution), then you have 60 days from the date the offset occurs to complete your rollover.

If you receive a payment and you were born on or before January 1, 1936

If you were born on or before January 1, 1936, and receive a lump sum payment that you don’t roll over, special rules for calculating

the amount of the tax on the payment might apply to you. For more information, see IRS Publication 575, Pension and Annuity Income.

If your payment is from a governmental section 457(b) plan

If the Plan is a governmental section 457(b) plan, the same rules described elsewhere in this notice generally apply, allowing you

to roll over the payment to an IRA or an employer plan that accepts rollovers. One difference is that, if you don’t do a rollover, you

won’t have to pay the 10% additional tax on early distributions from the Plan even if you are under age 59½ (unless the payment is

from a separate account holding rollover contributions that were made to the Plan from a tax-qualified plan, a section 403(b) plan,

or an IRA). However, if you do a rollover to an IRA or to an employer plan that isn’t a governmental section 457(b) plan, a later

distribution made before age 59½ will be subject to the 10% additional tax on early distributions (unless an exception applies). Other

differences include that you can’t do a rollover if the payment is an “unforeseeable emergency” distribution, and that the special rules

under the sections “If your payment includes employer stock that you don’t roll over” and “If you were born on or before January 1,

1936” don’t apply.

If you are an eligible retired public safety officer and your payment is used to pay for health coverage or qualified long-term

care insurance

If the Plan is a governmental plan, you retired as a public safety officer, and your retirement was by reason of disability or was after

normal retirement age, you can exclude from your taxable income, not to exceed $3,000, the amounts, (1) that were paid by the Plan

directly to an insurer of health coverage or qualified long-term care insurance or (2) that were received by you from the Plan and used

to pay for premiums to an accident or health plan (or a qualified long-term care insurance contract) that your employer maintains for

you, your spouse, or your dependents. For this purpose, a public safety officer is a law enforcement officer, firefighter, chaplain, or

member of a rescue squad or ambulance crew.

If you roll over your payment to a SIMPLE IRA

You can only roll over a payment from the Plan to a SIMPLE IRA plan after the end of the 2‑year period beginning on the date you

first participated in the SIMPLE IRA plan.

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If you roll over your payment to a Roth IRA

If you roll over a payment from the Plan to a Roth IRA (which, for purposes of this explanation, includes a Roth SIMPLE IRA), a

special rule applies under which the amount of the payment rolled over, reduced by any after-tax amounts, will be taxed. In general,

the 10% additional tax on early distributions won’t apply. However, if you take the amount rolled over out of the Roth IRA within the

5‑year period that begins on January 1 of the year of the rollover, the 10% additional tax will apply on the amount includible in gross

income (unless an exception applies).

If you roll over the payment to a Roth IRA, you won’t have to take required minimum distributions from the Roth IRA during your

lifetime. Later payments from the Roth IRA that are qualified distributions won’t be taxed, including earnings after the rollover. A

qualified distribution from a Roth IRA is a payment made after you are age 59½ (or after your death or disability, or as a qualified

first-time homebuyer distribution of up to $10,000) and after you have had a Roth IRA for at least 5 years. In applying this 5‑year

rule, you count from January 1 of the year for which your first contribution was made to a Roth IRA. Payments from the Roth IRA

that aren’t qualified distributions will be taxed to the extent of earnings after the rollover, including the 10% additional tax on early

distributions (unless an exception applies). For more information, see IRS Publication 590‑A, Contributions to Individual Retirement

Arrangements (IRAs), and IRS Publication 590‑B, Distributions from Individual Retirement Arrangements (IRAs).

If you roll over your payment to a designated Roth account in the Plan

You can’t roll over a payment to a designated Roth account in another employer’s plan. However, you can roll the payment over into

a designated Roth account in the distributing Plan. If you roll over a payment from the Plan to a designated Roth account in the Plan,

the amount of the payment rolled over, reduced by any after-tax amounts directly rolled over, will be taxed. In general, the 10% additional tax on early distributions won’t apply. However, if you take the amount rolled over out of the designated Roth account within

the 5‑year period that begins on January 1 of the year of the rollover, the 10% additional tax will apply on the amount includible in

gross income (unless an exception applies).

If you roll over the payment to a designated Roth account in the Plan, you won’t have to take required minimum distributions from

the designated Roth account during your lifetime. Later payments from the designated Roth account that are qualified distributions

won’t be taxed, including earnings after the rollover. A qualified distribution from a designated Roth account is a payment made both

after you are age 59½ (or after your death or disability) and after you have had a designated Roth account in the Plan for at least 5

years. In applying this 5‑year rule, you count from January 1 of the year of the first contribution to your designated Roth account.

However, if you made a direct rollover to a designated Roth account in the Plan from a designated Roth account in a plan of another

employer, the 5‑year period begins on January 1 of the year you made the first contribution to the designated Roth account in the Plan

or, if earlier, to the designated Roth account in the plan of the other employer. Payments from the designated Roth account that aren’t

qualified distributions will be taxed to the extent of earnings after the rollover, including the 10% additional tax on early distributions

(unless an exception applies).

If you aren’t a Plan participant

Payments after death of the participant. If you receive a payment after the participant’s death that you don’t roll over, the payment

generally will be taxed in the same manner described elsewhere in this notice. However, the 10% additional tax on early distributions

and the special rules for public safety officers don’t apply, and the special rule described under the section “If you were born on or

before January 1, 1936” applies only if the deceased participant was born on or before January 1, 1936.

If you are a surviving spouse. If you receive a payment from the Plan as the surviving spouse of a deceased participant, you have

the same rollover options that the participant would have had, as described elsewhere in this notice. In addition, if you choose to

do a rollover to an IRA, you may treat the IRA either as your own or as an inherited IRA.

An IRA you treat as your own is treated like any other IRA of yours, so that payments made to you before you are age 59½ will

be subject to the 10% additional tax on early distributions (unless an exception applies) and required minimum distributions from

your IRA will be based on your age.

If you treat the IRA as an inherited IRA, payments from the IRA won’t be subject to the 10% additional tax on early distributions.

However, if the participant had started taking required minimum distributions from the Plan, required minimum distributions must

continue to be made from the inherited IRA. If the participant had not started taking required minimum distributions from the

Plan, distributions from the inherited IRA must begin when the participant would have been required to begin required minimum

distributions.

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February 2, 2026

If you are a surviving beneficiary other than a spouse. If you receive a payment from the Plan because of the participant’s death

and you are a designated beneficiary other than a surviving spouse, the only rollover option you have is to do a direct rollover to an

inherited IRA. Payments from the inherited IRA won’t be subject to the 10% additional tax on early distributions. You will have

to take required minimum distributions from the inherited IRA.

For more information, see IRS Publication 590‑A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication

590‑B, Distributions from Individual Retirement Arrangements (IRAs).

Payments under a qualified domestic relations order (QDRO). If you are the spouse or former spouse of the participant who receives

a payment from the Plan under a QDRO, you generally have the same options and the same tax treatment that the participant would

have (for example, you may roll over the payment to your own IRA or an eligible employer plan that will accept it). However, payments under the QDRO won’t be subject to the 10% additional tax on early distributions.

For more information, see IRS Publication 504, Divorced or Separated Individuals.

If you are a nonresident alien

If you are a nonresident alien and you don’t do a direct rollover to a U.S. IRA or U.S. employer plan, instead of withholding 20%,

the Plan is generally required to withhold 30% of the payment for federal income taxes. If the amount withheld exceeds the amount

of tax you owe (as may happen if you do a 60-day rollover), you may request an income tax refund by filing IRS Form 1040NR, U.S.

Nonresident Alien Income Tax Return, and attaching your IRS Form 1042‑S, Foreign Person’s U.S. Source Income Subject to Withholding. See IRS Form W‑8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting

(Individuals), for claiming that you are entitled to a reduced rate of withholding under an income tax treaty. For more information,

see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515, Withholding of Tax on Nonresident Aliens and

Foreign Entities.

Other special rules

If a payment is one in a series of payments for less than 10 years, your choice whether to do a direct rollover will apply to all later

payments in the series (unless you make a different choice for later payments).

If your payments for the year are less than $200, not including payments from a designated Roth account in the Plan, the Plan isn’t

required to allow you to do a direct rollover and isn’t required to withhold federal income taxes. However, you may do a 60‑day

rollover.

Unless you elect otherwise, a mandatory cashout of more than $1,000, not including payments from a designated Roth account in the

Plan, will be directly rolled over to an IRA chosen by the Plan administrator or the payor. A mandatory cashout is a payment from a

plan to a participant made before age 62 (or normal retirement age, if later) without the participant’s consent. Generally, a mandatory

cashout is only allowed if the participant’s benefit doesn’t exceed $7,000.

You may have the ability to repay certain distributions from your retirement plan. If you took a qualified reservist distribution, a qualified disaster recovery distribution, a qualified birth or adoption distribution, an emergency personal expense distribution, a domestic

abuse victim distribution, or a terminal illness distribution, you generally may repay that distribution to an eligible retirement plan

within a certain time period. For more information on repayments of qualified reservist distributions, see IRS Publication 3, Armed

Forces’ Tax Guide. For more information on other repayments, see IRS Publication 575, Pension and Annuity Income, or consult a

professional tax advisor.

FOR MORE INFORMATION

You may wish to consult with the Plan administrator or payor, or a professional tax advisor, before taking a payment from the Plan.

Also, you can find more detailed information on the federal tax treatment of payments from employer plans in: IRS Publication 575,

Pension and Annuity Income; IRS Publication 590‑A, Contributions to Individual Retirement Arrangements (IRAs); IRS Publication 590‑B, Distributions from Individual Retirement Arrangements (IRAs); and IRS Publication 571, Tax-Sheltered Annuity Plans

(403(b) Plans). These publications are available from a local IRS office, on the web at www.irs.gov, or by calling 1‑800‑TAX‑FORM.

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For Payments From a

Designated Roth Account

YOUR OPTIONS FOR ELIGIBLE ROLLOVER DISTRIBUTIONS

You are receiving this notice because you are eligible to receive a payment from the [INSERT NAME OF PLAN] (the “Plan”) that

you can transfer (roll over) to a Roth IRA or designated Roth account in an employer plan. This notice is intended to help you decide

whether to roll over the payment (or some portion of it).

CONTENTS

GENERAL INFORMATION ABOUT ROLLOVERS

What can I do with an amount that is eligible for rollover?

How can a payment affect my taxes?

How can a rollover affect my taxes?

What types of retirement accounts and plans may accept my rollover?

How do I do a rollover?

How much may I roll over?

If I don’t do a rollover, will I have to pay the 10% additional tax on distributions before age 59½?

If I do a rollover to a Roth IRA, will the 10% additional tax apply to a later distribution from the IRA before age 59½?

Will I owe state income taxes?

SPECIAL RULES AND OPTIONS

If you miss the 60-day rollover deadline

If your payment includes employer stock that you don’t roll over

If you have an outstanding loan that is being offset

If you receive a payment and you were born on or before January 1, 1936

If your payment is from a governmental section 457(b) plan

If you are an eligible retired public safety officer and your payment is used to pay for health coverage or qualified long-term care

insurance

If you roll over your payment to a Roth SIMPLE IRA

If you aren’t a Plan participant

If you are a nonresident alien

If you receive a payment from a pension‑linked emergency savings account

Other special rules

FOR MORE INFORMATION

GENERAL INFORMATION ABOUT ROLLOVERS

This notice describes the rollover rules that apply to payments from the Plan that are from a designated Roth account. If you also

receive a payment from the Plan that isn’t from a designated Roth account, you will be provided a different notice for that payment,

and the Plan administrator or the payor will tell you the amount that is being paid from each account.

Rules that apply to most payments from a designated Roth account are described in this “General Information About Rollovers” section. Special rules that only apply in certain circumstances are described in the “Special Rules and Options” section, including rules

if your Plan is a governmental section 457(b) plan, you have after-tax contributions, or your benefit doesn’t exceed $7,000.

What can I do with an amount that is eligible for rollover?

When an amount payable (that is, an amount you are eligible to take as a payment from the Plan) is eligible for rollover, you generally

may choose some combination of the following:

•

•

•

•

Leave it in the Plan, that is, do not take the payment,

Roll it over into a designated Roth account in another plan,

Roll it over into a Roth IRA, or

Take it, don’t roll it over, and pay any required taxes.

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February 2, 2026

Whether these options are available to you depends on your circumstances and the terms of the Plan. For example, you may be

required to take a payment (and not roll it over) based on your age or if your benefit is below a certain threshold.

How can a payment affect my taxes?

After-tax contributions included in a payment from a designated Roth account aren’t taxed, but earnings might be taxed. The tax

treatment of earnings included in the payment depends on whether the payment is a qualified distribution. If a payment is only part of

your designated Roth account, the payment will include an allocable portion of the earnings in your designated Roth account.

If the payment from the Plan isn’t a qualified distribution and you don’t do a rollover to a Roth IRA or a designated Roth account in

an employer plan, you will be taxed on the portion of the payment that is earnings. If you are under age 59½, a 10% additional tax

on early distributions (generally, distributions made before age 59½) will also apply to the earnings (unless an exception applies).

If the payment from the Plan is a qualified distribution, you won’t be taxed on any part of the payment even if you don’t do a rollover.

A qualified distribution from a designated Roth account in the Plan is a payment made after you are age 59½ (or after your death or

disability) and after you have had a designated Roth account in the Plan for at least 5 years. In applying the 5‑year rule, you count

from January 1 of the year the first contribution was made to the designated Roth account. However, if you did a direct rollover to

a designated Roth account in the Plan from a designated Roth account in another employer plan, your participation will count from

January 1 of the year the first contribution was made to the designated Roth account in the Plan or, if earlier, to the designated Roth

account in the other employer plan.

How can a rollover affect my taxes?

If the payment isn’t a qualified distribution and you do a rollover, you won’t have to pay taxes currently on the earnings and you won’t

have to pay taxes later on payments that are qualified distributions. If the payment is a qualified distribution and you do a rollover, you

won’t be taxed on the amount you roll over and any earnings on the amount you roll over won’t be taxed when paid later.

What types of retirement accounts and plans may accept my rollover?

You may roll over the payment to either a Roth IRA (a Roth individual retirement account or Roth individual retirement annuity) or

a designated Roth account in an employer plan (a tax-qualified plan, section 403(b) plan, or governmental section 457(b) plan) that

will accept the rollover. The rules of the Roth IRA or employer plan that holds the rollover will determine your investment options,

fees, and rights to payment from the Roth IRA or employer plan (for example, Roth IRAs cannot provide loans). Further, the amount

rolled over will become subject to the tax rules that apply to the Roth IRA or the designated Roth account in the employer plan. In

general, these tax rules are similar to those described elsewhere in this notice, but differences include:

•

•

•

If you do a rollover to a Roth IRA, all of your Roth IRAs will be considered for purposes of determining whether you have satisfied the 5‑year rule (counting from January 1 of the year for which your first contribution was made to any of your Roth IRAs).

If you do a rollover to a Roth IRA, you must keep track of the aggregate amount of the after-tax contributions in all of your Roth

IRAs (in order to determine your taxable income for later Roth IRA payments that aren’t qualified distributions).

Eligible rollover distributions from a Roth IRA can only be rolled over to another Roth IRA.

How do I do a rollover?

There are two ways to do a rollover. You can either do a direct rollover or a 60‑day rollover.

If you do a direct rollover, the Plan will make the payment directly to your Roth IRA or designated Roth account in an employer plan.

You should contact the Roth IRA sponsor or the administrator of the employer plan for information on how to do a direct rollover.

If you do a direct rollover of only a portion of the amount paid from the Plan and a portion is paid to you at the same time, the portion directly rolled over consists first of earnings. For example, assume you are receiving a nonqualified distribution of $12,000, of

which $2,000 is earnings. In this case, if you directly roll over $10,000 to an IRA that is a Roth IRA, no amount is taxable because

the $10,000 amount rolled over includes the $2,000 in earnings and the remaining $2,000 paid to you is attributable to after-tax contributions.

If you do a 60-day rollover, you will receive a payment from the Plan and then make a deposit (generally within 60 days) into a Roth

IRA, whether the payment is a qualified or nonqualified distribution. In addition, you can do a rollover by making a deposit within 60

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days into a designated Roth account in an employer plan if the payment is a nonqualified distribution and the rollover doesn’t exceed

the amount of the earnings in the payment. You can’t do a 60‑day rollover to an employer plan of any part of a qualified distribution.

If you do a 60-day rollover and the payment isn’t a qualified distribution, the Plan is required to withhold 20% of the earnings for

federal income taxes (up to the amount of cash and property received other than employer stock). This means that, in order to roll over

the entire payment in a 60‑day rollover to a Roth IRA, you must use other funds to make up for the amount withheld.

How much may I roll over?

You may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except:

•

•

•

•

•

•

•

•

•

•

•

Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the joint lives or joint life

expectancies of you and your beneficiary);

Required minimum distributions to a beneficiary;

Hardship distributions;

Payments of employee stock ownership plan (ESOP) dividends;

Corrective distributions of contributions that exceeded tax law limitations;

Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment ends);

Cost of life insurance paid by the Plan;

Payments of certain automatic enrollment contributions that you request to withdraw within 90 days of your first contribution;

Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP;

Distributions used to pay certain premiums for health and accident insurance; and

Amounts treated as distributed as a result of the purchase of a collectible.

The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover.

If I don’t do a rollover, will I have to pay the 10% additional tax on distributions before age 59½?

If a payment isn’t a qualified distribution and you are under age 59½, you will have to pay the 10% additional tax on early distributions with respect to the earnings allocated to the payment that you don’t roll over (including amounts withheld for income tax),

unless one of the exceptions listed below applies. This tax is in addition to the regular income tax on the earnings not rolled over.

The 10% additional tax doesn’t apply to the following payments from the Plan:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Payments made after you separate from service if you are at least age 55 in the year of the separation;

Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or

life expectancy (or the joint lives or joint life expectancies of you and your beneficiary);

Payments from a governmental plan made after you separate from service as a qualified public safety employee and, in the year

of separation, have reached age 50 or 25 years of service under the Plan;

Payments from a private‑sector plan made after you separate from service as a private‑sector firefighter and, in the year of separation, have reached age 50 or 25 years of service under the Plan;

Payments made due to disability;

Payments made after your death;

Payments of ESOP dividends;

Corrective distributions of contributions that exceed tax law limitations;

Cost of life insurance paid by the Plan;

Payments made directly to the government to satisfy a federal tax levy;

Payments made under a qualified domestic relations order (QDRO);

Payments from a defined contribution plan that are qualified birth or adoption distributions;

Payments from a defined contribution plan for purposes of meeting unforeseeable or immediate financial needs relating to personal or family emergency expenses (emergency personal expense distributions);

Payments to a victim of domestic abuse from a defined contribution plan that isn’t subject to the qualified joint survivor annuity

or qualified preretirement survivor annuity rules (domestic abuse victim distributions);

Payments after you receive a certification from a physician that you have a terminal illness (terminal illness distributions);

Payments that are qualified disaster recovery distributions;

Payments made from a defined contribution plan that are qualified long-term care distributions;

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•

•

•

•

Payments up to the amount of your deductible medical expenses (without regard to whether you itemize deductions for the taxable year);

Certain payments made while you are on active duty if you were a member of a reserve component called to duty after September

11, 2001, for more than 179 days;

Payments of certain automatic enrollment contributions that you request to withdraw within 90 days of your first contribution;

and

Payments from a pension-linked emergency savings account.

For more information about the 10% additional tax and the exceptions to the 10% additional tax, see IRS Publication 575, Pension

and Annuity Income, under the heading Tax on Early Distributions. For information on how to claim an exception, see the Instructions

for IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

If I do a rollover to a Roth IRA, will the 10% additional tax apply to a later distribution from the Roth IRA before age 59½?

If you receive a payment from a Roth IRA when you are under age 59½, you will have to pay the 10% additional tax on early distributions on the earnings paid from the Roth IRA, unless an exception applies or the payment is a qualified distribution. In general,

the exceptions to the 10% additional tax for early distributions from a Roth IRA listed above are the same as the exceptions for early

distributions from a designated Roth account in an employer plan. However, there are a few differences for payments from a Roth

IRA, including:

•

•

•

The exception for payments from a plan made after you separate from service if you are at least age 55 in the year of the separation (or the earlier of age 50 or attainment of 25 years of service under the Plan for qualified public safety employees and

private-sector firefighters) doesn’t apply to payments from an IRA;

The exception for payments made pursuant to a QDRO under a plan doesn’t apply to an IRA (although a special rule applies

under which, as part of a divorce or separation agreement, a tax-free transfer may be made directly to a Roth IRA of a spouse or

former spouse); and

The exception for substantially equal periodic payments from a plan also applies to payments from an IRA but without regard to

whether you have had a separation from service.

Also, there are exceptions to the 10% additional tax that do not apply to payments from a plan but that do apply to payments from a

Roth IRA, including:

•

•

•

Payments for qualified higher education expenses;

Payments up to $10,000 used in a qualified first-time home purchase; and

Payments for health insurance premiums after you have received unemployment compensation for 12 consecutive weeks (or

would have been eligible to receive unemployment compensation but for self‑employed status).

For more general information about the 10% additional tax and the exceptions to the 10% additional tax on payments from an IRA,

see the Instructions to IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. See

also, IRS Publication 590‑B, Distributions from Individual Retirement Arrangements (IRAs), under the heading Early Distributions.

Will I owe state income taxes?

This notice doesn’t address any state or local income tax rules (including withholding rules).

SPECIAL RULES AND OPTIONS

If you miss the 60‑day rollover deadline

Generally, the 60‑day rollover deadline can’t be extended. However, the IRS has authority to waive the deadline under certain extraordinary circumstances, such as when external events prevented you from completing the rollover by the 60‑day rollover deadline.

Under certain circumstances, you may claim eligibility for a waiver of the 60‑day rollover deadline by making a written self-certification. Otherwise, to apply for a waiver from the IRS, you must file a private letter ruling request with the IRS. Private letter ruling

requests require the payment of a nonrefundable user fee. For more information, see IRS Publication 590‑A, Contributions to Individual Retirement Arrangements (IRAs), under the heading Rollovers.

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If your payment includes employer stock that you don’t roll over

If you receive a payment that isn’t a qualified distribution and you don’t roll it over, you can apply a special rule to payments of

employer stock (or other employer securities) that are paid in a lump sum after separation from service (or after age 59½, disability,

or the participant’s death). Under the special rule, the net unrealized appreciation on the stock included in the earnings in the payment won’t be taxed when distributed to you from the Plan and will be taxed at capital gain rates when you sell the stock. If you do a

rollover to a Roth IRA or a designated Roth account in another employer plan for a nonqualified distribution that includes employer

stock (for example, by selling the stock and rolling over the proceeds within 60 days of the distribution), you won’t have any taxable

income and the special rule relating to the distributed employer stock won’t apply to any later payments from the Roth IRA or, generally, the plan. Net unrealized appreciation is generally the increase in the value of the employer stock after it was acquired by the

Plan. The Plan administrator can tell you the amount of any net unrealized appreciation.

If you receive a payment that is a qualified distribution that includes employer stock and you don’t roll it over, your basis in the stock

(used to determine gain or loss when you later sell the stock) will equal the fair market value of the stock at the time of the payment

from the Plan.

If you have an outstanding loan that is being offset

If you have an outstanding loan from the Plan, your Plan benefit may be offset by the outstanding amount of the loan (offset amount),

typically when your employment ends. The offset amount is treated as a distribution to you at the time of the offset. Generally, you

may roll over all or any portion of the offset amount. If the distribution attributable to the offset isn’t a qualified distribution and you

don’t roll over the offset amount, you will be taxed on any earnings included in the distribution (including the 10% additional tax on

early distributions, unless an exception applies). You may roll over the earnings included in the loan offset to a Roth IRA or designated Roth account in an employer plan (if the terms of the employer plan permit the plan to receive plan loan offset rollovers). You

may also roll over the full amount of the offset to a Roth IRA.

How long you have to complete the rollover depends on what kind of plan loan offset you have. If you have a qualified plan loan

offset, you will have until your tax return due date (including extensions) for the tax year during which the offset occurs to complete

your rollover. A qualified plan loan offset occurs when a plan loan in good standing is offset because your employer plan terminates,

or because you separate from service. If your plan loan offset occurs for any other reason (such as a failure to make level repayments

that results in a deemed distribution), then you have 60 days from the date the offset occurs to complete your rollover.

If you receive a payment and you were born on or before January 1, 1936

If you were born on or before January 1, 1936, and receive a lump sum payment that isn’t a qualified distribution and that you don’t

roll over, special rules for calculating the amount of the tax on the earnings in the payment might apply to you. For more information,

see IRS Publication 575, Pension and Annuity Income.

If your payment is from a governmental section 457(b) plan

If the Plan is a governmental section 457(b) plan, the same rules described elsewhere in this notice generally apply, allowing you to

roll over the payment to a Roth IRA or a designated Roth account in an employer plan that accepts rollovers. One difference is that,

if you receive a payment that isn’t a qualified distribution and you don’t roll it over, you won’t have to pay the 10% additional tax

on early distributions with respect to the earnings allocated to the payment that you don’t roll over, even if you are under age 59½

(unless the payment is from a separate account holding rollover contributions that were made to the Plan from a tax-qualified plan,

a section 403(b) plan, or an IRA). However, if you do a rollover to a Roth IRA or to a designated Roth account in an employer plan

that isn’t a governmental section 457(b) plan, a later distribution that isn’t a qualified distribution made before age 59½ will be subject to the 10% additional tax on earnings allocated to the payment (unless an exception applies). Other differences include that you

can’t do a rollover if the payment is an “unforeseeable emergency” distribution and that the special rules under the sections “If your

payment includes employer stock that you don’t roll over” and “If you receive a nonqualified distribution and you were born on or

before January 1, 1936” don’t apply.

If you are an eligible retired public safety officer and your payment is used to pay for health coverage or qualified long-term

care insurance

If the Plan is a governmental plan, you retired as a public safety officer, and your retirement was by reason of disability or was after

normal retirement age, you can exclude from your taxable income, up to a maximum of $3,000 annually, nonqualified distributions

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(1) that were paid by the Plan directly to an insurer of health coverage or qualified long-term care insurance or (2) that were received

b

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