Section 2. Definitions.

Section 2.1. Eligible rollover distribution: An eligible rollover distribution is 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 ten years or more; any

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distribution to the extent such distribution is required under IRC 401(a)(9); 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 IRC 408(a) or (b) (a “traditional IRA”) or a Roth individual retirement account or annuity described in IRC 408A (a “Roth IRA”); or (2) to a qualified defined contribution, defined benefit, or annuity plan described in IRC 401(a) or IRC 403(a) or to an annuity contract described in IRC 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 IRC 401(a) (9), described in LRM #51, section 8.8(a)(1) (April 1 of the calendar year following the calendar year in which the participant reaches the Applicable Age), the statutory required beginning date (described in LRM #51, 8.7(a)(i)(II))) applies for other purposes, including the participant’s required beginning date for purposes of an eligible rollover distribution under IRC 402(c).)

Section 2.2. Eligible retirement plan: An eligible retirement plan is an eligible plan under IRC 457(b) 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 IRC 403(a), an annuity contract described in IRC 403(b), a SIMPLE IRA described in IRC 408(p), or a qualified defined benefit or defined contribution plan described in IRC 401(a), 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 IRC 414(p).

(Note to reviewer: See LRM #46 regarding application of guidance interpreting the Windsor decision to the rollover rules of IRC 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 IRC 414(p), 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. In 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 defined in IRC 401(a)(9)(E)) and that will be treated as an inherited IRA pursuant to the provisions of IRC 402(c)(11). Also, in this case, the determination of any required minimum distribution under IRC 401(a)(9) that is ineligible for rollover shall be made in accordance with Notice 2007-7, Q&A-17 and Q&A-18, as modified by Notice 2020-51, Q&A-3.

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(Note to reviewer: The blank above should be filled in with the section number of the plan corresponding to section 8.3 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.