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If * * * any portion of the balance to the credit of an
employee in a qualified trust is paid to him, * * * [and]
the employee transfers any portion of the property he
receives in such distribution to an eligible retirement
plan, [i.e., rollover] * * * then such distribution (to the
extent so transferred) shall not be includible in gross
income for the taxable year in which paid.
Further, section 402(a)(5)(C) provides that such a rollover
exclusion shall not apply "to any transfer of a distribution made
after the 60th day following the day on which the employee
received the property distributed." In other words, if a
taxpayer receives a distribution from a retirement plan and fails
to make a rollover of such distribution to an "eligible
retirement plan" within 60 days of taxpayer's receipt of such
distribution, it shall be taxable to him under section 72 in the
year of distribution. There is no provision in the law deferring
the inclusion of the distribution into gross income until the
succeeding year simply because the 60-day rollover period extends
into the succeeding year.
The term "eligible retirement plan" is defined in section
402(a)(5)(E)(iv) as "(I) an individual retirement account * * *,
(II) an individual retirement annuity * * *, (III) a qualified
trust, and (IV) an annuity plan described in section 403(a)."
(Emphasis added.) A "qualified trust" is defined in section
402(a)(5)(E)(iii) to mean "an employees' trust described in
section 401(a) which is exempt from tax under section 501(a)."
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Last modified: May 25, 2011