The notice is responsive to provisions of the SECURE 2.0 Act, which tasked the Treasury to provide guidance “in the form of sample forms….to simplify, standardize, facilitate, and expedite the completion of rollovers to eligible retirement plans and trustee-to-trustee transfers from individual retirement plans.”
The notice proposes four model forms and a five-step process designed to facilitate communication between distributing and receiving plans, while encouraging electronic communications, reducing reliance on participant-transmitted paperwork, and introducing common data standards intended to improve efficiency and to protect participant information.
In my view, IRS Notice 2026-49 should be viewed as a welcome and constructive development.
However, an interesting consideration it raises is why operational complexity itself has become such an entrenched feature of the defined contribution system, and what is the best solution to finally resolve it.
DC System Fragmentation: A Persistent Problem
By now, no one seriously disputes the notion that plan-to-plan roll-ins are incredibly difficult and – at least from the perspective of plan participants – represents the longstanding Achilles Heel of the defined contribution system.
Then why does it remain unresolved? After all, other financial sectors solved similar interoperability challenges decades ago. Consumers routinely transfer securities through ACATS. Banks exchange funds through highly automated networks. Electronic payment systems move trillions of dollars every day. By comparison, plan-to-plan retirement transfers remain dependent on manual reviews, proprietary forms, paper checks, and institution-specific procedures.
One possible explanation is development priority. Washington issues new regulations or passes new laws that require recordkeepers to make substantial IT updates, and to implement them within tight deadlines. Client-driven priorities also compete for resources. Because these initiatives can usually be handled within each recordkeeper’s own systems, they tend to receive attention first.
By contrast, plan-to-plan portability enhancements require industrywide collaboration and technical cooperation across recordkeepers, plan sponsors, service providers, and other stakeholders. Industry organizations are often strong advocates on policy issues, but they have not traditionally served as effective catalysts for building shared operational infrastructure.
Real Progress Towards Plan-to-Plan Portability
It took decades, but the industry is now fully awakened to the problems of cashout leakage, a mobile workforce and a DC system that is rife with friction. While some may argue over the reasons, it’s a well-established fact that approximately 30% of DC accounts represent balances that remain left-behind by terminated participants. And this figure grows every year.
More importantly than raising awareness, there’s movement towards real solutions.
The industry’s largest DC recordkeepers, representing 63% of the market by participants, have collaborated to form the Portability Services Network to facilitate the widespread adoption of auto portability – and it’s working, as large numbers of plan sponsors have already adopted auto portability.
Please read that sentence again, slowly.
Then take a big step further into a digital future, where broader transformative change can occur, as identified in a March 2026 whitepaper by Retirement Clearinghouse (RCH) – Building Out Clearinghouse Services for the U.S. Retirement System: A Blueprint for a Digital Infrastructure, and discussed in a subsequent article.
The paper’s authors argue that the retirement system's challenges stem not from inconsistent forms but from the lack of a shared digital infrastructure capable of locating, validating, and moving retirement assets seamlessly across institutions. The Digital Rollover Network (DRN) concept described in the paper treats fragmentation as an infrastructure problem.
What’s Ahead?
In the past, industry modernization often depended more on regulatory pressure and public policy initiatives than on purely market-driven innovation.
This time it’s different.
With plan-to-plan portability, I believe that the market is where real change is coming from, as providers begin to voluntarily embrace a digital infrastructure and as plan sponsors are increasingly demanding it for their participants.