(a) Notwithstanding any provision of this subpart to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the board, to have any portion of an eligible rollover distribution that is equal to at least five hundred dollars ($500) paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(b) For purposes of this section the following definitions shall apply:
(1) ELIGIBLE ROLLOVER DISTRIBUTION. Any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: Any distribution that is one of a series of substantially equal periodic payments, not less frequently than annually, made for the life, or life expectancy, of the distributee or the joint lives, or joint life expectancies, of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more; any distribution to the extent such distribution is required under § 401(a)(9) Internal Revenue Code; the portion of any other distribution that is not includible in gross income, determined without regard to the exclusion for net unrealized appreciation with respect to employer securities; any hardship distribution described in § 401(k)(2)(B)(i)(IV), Internal Revenue Code; and any other distribution that is reasonably expected to total less than two hundred dollars ($200) during a year.
(2) An eligible retirement plan is an individual retirement account described in § 408(a), Internal Revenue Code, an individual retirement annuity described in § 408(b), Internal Revenue Code, an annuity plan described in § 403(a), Internal Revenue Code, a Roth Individual Retirement Account (Roth IRA) described in § 408A(b), Internal Revenue Code, or a qualified trust described in § 401(a), Internal Revenue Code, that accepts the distributee's eligible rollover distribution.
(3) DISTRIBUTEE. Includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in § 414(p), Internal Revenue Code, are distributees with regard to the interest of the spouse or former spouse.
(4) DIRECT ROLLOVER. A payment by the plan to the eligible retirement plan specified by the distributee.
(c) For distributions after December 31, 2009, a nonspouse beneficiary who is a designated beneficiary under § 401(a)(9)(E), Internal Revenue Code, and the regulations thereunder, by a direct trustee-to-trustee transfer, direct rollover, may roll over all or any portion of his or her distribution to an Individual Retirement Account (IRA) the beneficiary establishes for purposes of receiving the distribution. In order to be able to roll over the distribution, the distribution otherwise shall satisfy the definition of an eligible rollover distribution under § 401(a)(31), Internal Revenue Code.
Last modified: May 3, 2021