105 KAR 1:345. Rollovers and transfers of
contributions to other plans.
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)
AUTHORITY: KRS 61.645(9)(g)
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).
1. "Eligible rollover distribution" shall include any distribution of
all or any portion of the balance to the credit of the distributee, except:
Any distribution that is one of a series of substantially equal periodic
payments made at least annually:
For the life or life expectancy of the distributee and the distributee’s
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 the distribution is required under 26 U.S.C.
401(a)(9), except as provided in Section 2 of this administrative regulation;
The portion of any distribution that is not includable in gross income; and
Any other distribution that is reasonably expected to total less than $200
during the year.
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:
An individual retirement account or annuity described in 26 U.S.C. 408 (a) or
A qualified defined contribution plan described in 26 U.S.C. 401(a);
On or after January 1, 2007, a qualified defined benefit plan described in 26
U.S.C. 401(a); or
An annuity contract described in 26 U.S.C. 403(b); and
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
That is includable in gross income; and
That is not so includable.
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).
retirement plan" shall include any of the following that accepts the
distributee's eligible rollover distribution:
An individual retirement account described in 26 U.S.C. 408(a);
An individual retirement annuity described in 26 U.S.C. 408(b);
An annuity plan described in 26 U.S.C. 403(a);
A qualified trust described in 26 U.S.C. 401(a);
Effective January 1, 2002, an annuity contract described in 26 U.S.C. 403(b),
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,
Effective January 1, 2008, a Roth IRA described in 26 U.S.C. 408A.
"Distributee" shall include an employee or former employee and the
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 26
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
"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.