Section 2. Definitions.

Section 2.1. Eligible rollover distribution: An eligible rollover distribution is any distribution

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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 ten years or more; any distribution to the extent such distribution is required under §I RC 401(a)(9 ) of the Internal Revenue Code;); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and any other distribution(s) that is reasonably expected to total less than $200 during a year.

A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to (1) a traditional individual retirement account or annuity described in §I RC 408(a) or (b) of the Code (a “traditional IRA”) or a Roth individual retirement account or annuity described in §I RC 408A (a “Roth IRA”); or (2) to a qualified defined contribution, defined benefit, or annuity plan described in §I RC 401(a) or § IRC 403(a) or to an annuity contract described in §I RC 403(b), if such plan or contract provides for separate accounting for amounts so transferred (including interest thereon), including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

(Note to reviewer: If an employer has chosen a required beginning date under §I RC 401(a) (9 ) of the Code,) , described in LRM #51, section 8. 68 (a)(1) (April 1 of the calendar year following the calendar year in which the participant reaches age 70½), the Applicable Age), the statutory required beginning date (described in LRM #51, 8. 67 (a)( 3)) i)(II))) applies for other purposes, including the participant’s required beginning date for purposes of an eligible rollover distribution under §I RC 402(c).)

Section 2.2. Eligible retirement plan: An eligible retirement plan is an eligible plan under §I RC 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this plan, a traditional IRA, a Roth IRA, an annuity plan described in §I RC 403(a ) of the Code, ), an annuity contract described in §I RC 403(b ) of the Code, ), a SIMPLE IRA described in IRC 408(p), or a qualified defined benefit or defined contribution plan described in §I RC 401(a ) of the Code, ), that accepts the distributee’s eligible rollover distribution. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in §I RC 414(p ) of the Code. ).

(Note to reviewer: The Protecting Americans from Tax Hikes provisions of the Consolidated Appropriations Act of 2016, Pub. L. 114-113, (the PATH Act) expands portability of retirement assets by permitting taxpayers to roll over assets from traditional and SEP IRAs, as well as from employer-sponsored retirement plans, such as a 401(k), 403(b), or 457(b) plan, into a SIMPLE IRA plan. Thus, after the effective date of these changes in the PATH Act, a qualifed plan can provide for a direct rollover to a SIMPLE IRA. However, the following restrictions apply: (1) the provision does not allow SIMPLE

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IRAs to accept rollovers from Roth IRAs or designated Roth accounts, (2) the change applies only to rollovers made after the two-year period beginning on the date the participant frst participated in their employer’s SIMPLE IRA plan, (3) the law applies to rollovers from other plans to SIMPLE IRAs that are made after December 18, 2015, the date of enactment, and (4) the one-per-year limitation that applies to IRA-to-IRA rollovers applies to rollovers from a traditional, SIMPLE, or SEP IRA into a SIMPLE IRA.)

(Note to reviewer: See LRM #46 regarding application of guidance interpreting the Windsor decision to the rollover rules of Code §I RC 402(c).)

Section 2.3. Distributee: A 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 §I RC 414(p ) of the Code, ), are distributees with regard to the interest of the spouse or former spouse. A distributee also includes the participant’s nonspouse designated beneficiary under section ______ of the plan. I n the case of a nonspouse beneficiary, the direct rollover may be made only to a traditional IRA or Roth IRA that is established on behalf of the designated beneficiary (as defned in IRC 401(a)(9)(E)) and that will be treated as an inherited IRA pursuant to the provisions of §I RC 402(c)(11). Also, in this case, the determination of any required minimum distribution under §I RC 401(a)(9) that is ineligible for rollover shall be made in accordance with Notice 2007-7, Q&A-17 and Q&A-18, 2007-5 I.R.B. 395a s modifed by Notice 2020-51, Q&A-3.

(Note to reviewer: The blank above should be filled in with the section number of the plan corresponding to section 8. 23 of LRM #51.)

Section 2.4. Direct rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee.

Section 3 .Section 3. Written Explanation of Right to Direct Rollover. The plan administrator shall provide, within a reasonable time period before making an eligible rollover distribution, a written explanation to the participant that satisfes the requirements of IRC 402(f).

Section 4. Automatic Rollovers:

In the event of a mandatory distribution greater than $1,000, in accordance with the provisions of section _____ of the plan, if the participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the participant in a direct rollover or to receive the distribution directly, then the plan administrator will pay the distribution in a direct rollover to an individual retirement plan designated by the plan administrator. For purposes of determining whether a mandatory distribution is greater than $1000, the portion of the participant’s distribution attributable to any rollover contribution is included.

(Note to reviewer: The blank above should be filled in with the plan section number which corresponds to the mandatory distributions provisions of LRM #44.)

(Note to reviewer: A plan that is described in Code §I RC 414(k), relating to a defined benefit plan where the benefit is based partly on the balance of the participant’s separate account, may not be a Pre-approved Plan. (However, this rule will not be applied to prohibit a Pre-approved Plan’s acceptance of rollover contributions.) In addition, a Standardized Pre-approved defined benefit plan may not provide for employee

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contributions. Accordingly, a Standardized Pre-approved defined benefit plan may not include a deemed IRA under §I RC 408(q).)

(Note to reviewer: If an employer intends that this plan will accept rollovers from defined contribution plans to increase the annuity benefits otherwise payable under the plan, the plan must specifically provide for such rollovers , and must specify the types of rollover contributions it will accept and from which type of plans. The plan must also define how the rollover amounts are converted to additional annuity benefits for the participant and a surviving spouse, and other provisions necessary for benefits under the plan to be definitely determinable with respect to such rollovers.