Treasury, IRS Propose Streamlining Rollovers From 401(ks) to IRAs

The Treasury Department and the IRS are proposing new rules to streamline the process of moving retirement assets from 401(k) plans to Individual Retirement Accounts (IRAs). The aim is to reduce administrative burdens and make the transfer smoother, primarily by having recordkeepers take on more responsibility and facilitating electronic transfers.

Currently, the process is often complicated and time-consuming, involving multiple steps and forms. The GAO found that 25% of people who recently completed a plan-to-plan rollover believed there were too many steps, while 26% found the process too time-consuming. The new rules would introduce standardized forms and procedures for financial institutions to coordinate the transfers.

However, the process would remain optional, as requiring electronic transfers would necessitate expensive changes for many institutions.