Eligible Rollover Distribution & Retirement Plans
There are specific criteria that eligible distribution and retirement plans must meet in order to be involved in rollover transactions. These are outlined below.
Eligible Rollover Distribution
This is any payout to an employee of all or any portion of the balance to the credit of the employee in a qualified trust. However, it does not include:
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Any distribution, which is one of a series of substantially equal periodic payments;
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A minimum required distribution;
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Returns of excess 401(k) elective deferrals;
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The nontaxable portion of the distribution;
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Loans treated as distributions, because they didn’t meet certain requirements at the time they were made or later (e.g., default) unless a participant’s accrued benefits are reduced to repay the loan;
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Dividends on employer securities;
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Cost of life insurance coverage;
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Hardship distributions.
A single sum payment not substantially equal to a periodic payment made before, with or after start of periodic payments is eligible for rollover treatment.
Eligible Retirement Plans
Eligible rollover distributions from a qualified retirement plan, IRA, Sec. 403(b) annuity, or Sec. 457 deferred compensation plan may be rolled over to an eligible retirement plan, defined as:
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Sec 408(a) Individual Retirement Accounts
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Sec 408(b) Individual Retirement Annuities
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Sec 401(a) Qualified Plans
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Sec 403(b) Qualified Annuities
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Sec 403(b) Tax Sheltered Annuities or
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Sec 457 Governmental plans (deferred compensation plans of state and local governments and tax-exempt organizations).
In other words, an eligible rollover distribution from any type of eligible retirement plan can be rolled into any other eligible retirement plan, provided the new plan agrees to accept the rollover amount.