The IRS rewrote its retirement plan correction rulebook on October 22, 2026. Revenue Procedure 2026-34 is effective that day and supersedes Rev. Proc. 2021-30, along with Notice 2023-43, Notice 2024-77 and part of Notice 2024-2. Most of the coverage has been aimed at plan sponsors — expanded self-correction, a new deadline of the later of the third plan year after the failure or 18 months after it's identified.
One section matters directly to the person receiving the money.
The default favors the retiree
Section 301 of the SECURE 2.0 Act added Code section 414(aa), and Rev. Proc. 2026-34 section 6.12(1)(a) now implements it: an "Inadvertent Benefit Overpayment" that does not stem from a section 401(a)(17), 415 or 436 failure generally does not require any corrective payment to keep the plan compliant. The plan does not have to chase you. ERISA section 206(h) may even limit its ability to try.
That is a real improvement over the old regime, where sponsors routinely sent letters demanding years of overpaid benefits back.
But the tax treatment flips on one question
Here is the part that costs people money. Under section 6.12(1)(c)(i), the rollover status of an overpayment depends on whether the plan asks for it back — not on whether you did anything wrong.
- Recoupment not sought: the rolled-over overpayment is treated as an eligible rollover distribution under section 402(c)(12). It sits in your IRA legitimately.
- Recoupment sought and not returned: the unreturned portion is not treated as an eligible rollover distribution. The sponsor is required to notify you that it isn't eligible for tax-free rollover, and that notice may be combined with the recoupment request itself.
An amount that was never rollover-eligible but is sitting in a traditional IRA is an excess contribution. Under Code section 4973 that carries a 6% excise tax for every year it remains, until it's distributed or absorbed by unused contribution room. A letter that reads like a billing dispute is actually starting a tax clock.
Two traps and one protection
The 401(a)(17)/415 overpayments are automatic. Section 6.12(1)(c)(ii) treats an overpayment caused by a compensation-limit or annual-additions failure as one for which recoupment is sought — whether or not the sponsor ever asks. If you don't return it, it was never a valid rollover. Silence from the plan is not consent.
Returning the money is explicitly safe. Section 6.12(1)(c)(iii) provides that an amount transferred back to the originating plan counts as an eligible rollover distribution in both directions, "without regard to plan terms." Sending it back cannot create a second tax problem.
Below $250, nothing happens. Section 6.03(4) relieves the sponsor from seeking return of a 401(a)(17), 415 or 436 overpayment of $250 or less, and from sending the ineligibility notice. Footnote 6 of the revenue procedure notes this small-payment exception was added in response to a comment and did not appear in Notice 2024-77.
Practical takeaways
- Open the letter and date it. A recoupment request changes the character of money already in your IRA. It is not a negotiation you can let sit.
- Ask which Code section caused it. A 415 or 401(a)(17) failure behaves differently from an ordinary calculation error, and the plan knows which it is.
- Returning funds doesn't burn a rollover. The transfer back is protected by the revenue procedure, so the usual once-per-year and plan-terms worries don't apply.
- Note the reverse asymmetry. Section 6.03(3) lets a plan skip a corrective distribution owed to you of $75 or less when processing costs would exceed it. Small balances break in the plan's favor in both directions.
- Get tax help before withdrawing. Pulling an ineligible amount out of an IRA has its own reporting consequences; the fix is not simply writing a check.
Sources: IRS Revenue Procedure 2026-34, sections 6.03, 6.12 and 14–15; IRC sections 414(aa), 402(c)(12) and 4973; SECURE 2.0 Act section 301(b); The Tax Adviser; National Law Review; Current Federal Tax Developments.