If you have ever rolled over a 401(k), you may remember the strangest part of the process: your old plan mailed you a check, made payable to your new provider, and told you to forward it along. You were the courier for your own retirement savings.
The IRS is now considering ending that practice — and the public comment window closes Friday, October 23, 2026.
What the current rule allows
Treasury Regulation §1.401(a)(31)-1, Q&A-4 is the provision that makes the check-in-your-hands method legal. It says a plan trustee may accomplish a direct rollover by giving the participant a check made payable to the trustee, custodian, or issuer of another eligible retirement plan, and instructing the participant to deliver that check to the receiving plan.
That check is still a direct rollover. Because it is payable to the receiving institution rather than to you, it escapes the mandatory 20% withholding that applies to eligible rollover distributions paid to a participant. But the paper has to physically reach its destination, and nothing in the rule requires anyone but you to move it.
Why the IRS wants it gone
Section IV of Notice 2026-49 lists the guidance Treasury and the IRS are weighing. The first item is explicit: amend the regulations to remove Q&A-4, and amend Revenue Ruling 2014-9 to remove the safe harbor in Situation 2. The second item would require administrators and trustees to complete rollovers either by electronic transfer, or by paper check mailed or sent directly to the receiving plan — not to the participant.
The rationale appears in a footnote. The notice states that checks are over 16 times more likely to be lost, stolen, altered, or delayed than electronic payments, citing Treasury's payment modernization work under Executive Order 14247, signed March 25, 2025.
The replacement process
Notice 2026-49 was issued August 12, 2026 under Section 324 of the SECURE 2.0 Act, which directed Treasury to publish sample forms and procedures. The notice proposes a five-step sequence using four forms, with the two plans — not the participant — handling the handoff:
- You submit Form 1, the Participant's Rollover Request, with a signed authorization, to the receiving plan.
- The receiving plan forwards the request to the distributing plan on Form 2.
- The distributing plan verifies your information and returns Form 3, listing available transfer methods.
- The receiving plan confirms it can accept the rollover and selects a method on Form 4.
- The distributing plan transfers the funds directly.
Use of the forms is optional today, and the IRS states it is not currently providing safe harbors based on them. Safe harbors — including a presumption that the distributing plan is tax-qualified — are among the items under consideration after comments.
Practical takeaways
- Check the payee line, not the envelope. A check payable to your new custodian "for the benefit of" you is a direct rollover. A check payable to you personally is not: it triggers 20% withholding and starts a 60-day clock, and you must replace the withheld amount from other funds to keep the full balance tax-deferred.
- If a check does arrive, do not delay. Under current rules it is still your responsibility to deliver it. Uncashed and undelivered rollover checks are precisely the failure mode this proposal targets.
- Start at the receiving end. The proposed process begins with the plan you are moving into. Calling the new provider first already matches where the rules are heading.
- IRA-to-IRA moves are out of scope. The notice expressly does not apply to IRA-to-IRA transfers, which are generally handled through trustee-to-trustee transfers already.
- Comments are open until October 23, 2026 and may be submitted referencing Notice 2026-49.
Nothing has changed yet. But the direction is clear: the IRS would rather no participant ever touch a rollover check again.
Sources: IRS Notice 2026-49 (Aug. 12, 2026), Sections I–V and Appendix; IRS News Release IR-2026-91; Treas. Reg. §1.401(a)(31)-1, Q&A-3 and Q&A-4; Revenue Ruling 2014-9, Situation 2; SECURE 2.0 Act of 2022, Section 324; Executive Order 14247 (Mar. 25, 2025); IRS Tax Topic 413.