105 KAR 1:345. Rollovers and transfers of contributions to other plans

Link to law: http://www.lrc.ky.gov/kar/105/001/345.htm
Published: 2015

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      105 KAR 1:345. Rollovers and transfers of

contributions to other plans.

 

      RELATES

TO: KRS 16.510-16.652, 61.515-61.705, 78.520-78.852, 26 U.S.C. secs.

401(a)(31), 402(c), 408(d)(3)

      STATUTORY

AUTHORITY: KRS 61.645(9)(g)

      NECESSITY,

FUNCTION, AND CONFORMITY: KRS 61.645(9)(g) requires the Board of Trustees of

the Kentucky Retirement Systems to promulgate administrative regulations necessary

or proper in order to carry out the provisions of KRS 16.505 to 16.652, 61.510

to 61.705, and 78.510 to 78.852. This administrative regulation establishes what

constitutes eligible rollover distributions, eligible retirement plans,

distributions, distributees, and direct rollovers for purposes of compliance

with 26 U.S.C. 401(a).

 

      Section

1. "Eligible rollover distribution" shall include any distribution of

all or any portion of the balance to the credit of the distributee, except:

      (1)

Any distribution that is one of a series of substantially equal periodic

payments made at least annually:

      (a)

For the life or life expectancy of the distributee and the distributee’s

designated beneficiary;

      (b)

The joint lives or joint life expectancies of the distributee and the

distributee’s designated beneficiary; or

      (c)

For a specified period of ten years or more;

      (2)

Any distribution to the extent the distribution is required under 26 U.S.C.

401(a)(9), except as provided in Section 2 of this administrative regulation;

      (3)

The portion of any distribution that is not includable in gross income; and

      (4)

Any other distribution that is reasonably expected to total less than $200

during the year.

 

      Section

2. (1) Effective January 1, 2002, a portion of a distribution shall not fail to

be an eligible rollover distribution merely because the portion consists of

after-tax employee contributions that are not includable in gross income. However,

this portion may be transferred:

      (a)

Only to:

      1.

An individual retirement account or annuity described in 26 U.S.C. 408 (a) or

(b);

      2.

A qualified defined contribution plan described in 26 U.S.C. 401(a);

      3.

On or after January 1, 2007, a qualified defined benefit plan described in 26

U.S.C. 401(a); or

      4.

An annuity contract described in 26 U.S.C. 403(b); and

      (b)

An account or plan provided for in Section 2(1)2.-4. of this administrative

regulation that agrees to separately account for amounts so transferred, and

earnings on those amounts, including separately accounting for the portion of

the distribution:

      1.

That is includable in gross income; and

      2.

That is not so includable.

      (2)

Effective January 1, 2002, the definition of eligible rollover distribution

shall also include a distribution to a surviving spouse, or to a spouse or

former spouse who is an alternate payee under a qualified domestic relations

order, as defined in 26 U.S.C. 414(p).

      (3)

"Eligible

retirement plan" shall include any of the following that accepts the

distributee's eligible rollover distribution:

      (a)

An individual retirement account described in 26 U.S.C. 408(a);

      (b)

An individual retirement annuity described in 26 U.S.C. 408(b);

      (c)

An annuity plan described in 26 U.S.C. 403(a);

      (d)

A qualified trust described in 26 U.S.C. 401(a);

      (e)

Effective January 1, 2002, an annuity contract described in 26 U.S.C. 403(b),

      (f)

Effective January 1, 2002, a plan eligible under 26 U.S.C. 457(b) that is

maintained by a state, political subdivision of a state, or any agency or

instrumentality of a state or a political subdivision of a state that agrees to

separately account for amounts transferred into that plan from the retirement system,

or

      (g)

Effective January 1, 2008, a Roth IRA described in 26 U.S.C. 408A.

      (4)(a)

"Distributee" shall include an employee or former employee and the

following:

      1.

The employee’s or former employee’s surviving spouse; and

      2.

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 26

U.S.C. 414(p).

      (b)

Effective January 1, 2007, a "distribute" shall also include a

nonspouse beneficiary who is a designated beneficiary as defined by 26 U.S.C.

401(a)(9)(E). However, a nonspouse beneficiary may rollover the distribution

only to an individual retirement account or individual retirement annuity

established for the purpose of receiving the distribution, and the account or

annuity shall be treated as an inherited individual retirement account or

annuity.

      (c)

"Direct rollover" shall include a payment by the plan to the eligible

retirement plan specified by the distributee. (35 Ky.R. 1094; Am. 1721; eff.

2-6-09.)