Section 86.255

Title VII CITIES, TOWNS AND VILLAGES

Chapter 86

Effective - 28 Aug 2011, 3 histories   

  86.255.  Eligible rollover distribution payable, election to pay directly to plan — definitions — written explanation required by board, when — distribution made, when — prohibition on eligible rollover distributions to certain members, exception. — 1.  Notwithstanding any other provision of the plan established in sections 86.200 to 86.366, if an eligible rollover distribution becomes payable to a distributee, the distributee may elect, at the time and in the manner prescribed by the board of trustees, to have any of the eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

  2.  For purposes of this section, the following terms mean:

  (1)  "Direct rollover", a payment by the board of trustees from the fund to the eligible retirement plan specified by the distributee;

  (2)  "Distributee", a member, a surviving spouse, a spouse, or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code of 1986, as amended, or, effective for distributions made on or after January 1, 2010, a nonspouse beneficiary;

  (3)  "Eligible retirement plan", an individual retirement account described in Section 408(a) of the Internal Revenue Code, an individual retirement annuity described in Section 408(b) of the Internal Revenue Code, or a qualified trust described in Section 401(a) of the Internal Revenue Code that accepts the distributee's eligible rollover distribution or, effective for eligible rollover distributions made on or after January 1, 2002, an annuity contract described in Section 403(b) of the Internal Revenue Code or an eligible plan under Section 457(b) of the Internal Revenue 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, and shall include, for eligible rollover distributions made on or after January 1, 2002, 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 Section 414(p) of the Internal Revenue Code.  Effective for distributions made on or after January 1, 2008, eligible retirement plan shall also include a Roth IRA as described in Section 408 of the Internal Revenue Code of 1986, as amended, provided that for distributions made on or after January 1, 2010, to a nonspouse beneficiary, an eligible retirement plan shall include only an individual retirement account described in Section 408(a) of the Internal Revenue Code of 1986, as amended, an individual retirement annuity described in Section 408(b) of the Internal Revenue Code of 1986, as amended, or a Roth IRA described in Section 408A of the Internal Revenue Code of 1986, as amended, that is an inherited individual retirement account or annuity under Section 408 of the Internal Revenue Code of 1986, as amended;

  (4)  "Eligible rollover distribution", any distribution of all or any portion of a member's benefit, other than:

  (a)  A distribution that is one of a series of substantially equal periodic payments, made not less frequently than annually, for the life or life expectancy of the distributee or for 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;

  (b)  The portion of a distribution that is required under Section 401(a)(9) of the Internal Revenue Code; or

  (c)  Effective for distributions made on or after 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 which are not includable in gross income.  However, for distributions made before January 1, 2007, such portion may be transferred only to an individual retirement account or annuity described in Section 408(a) or (b) of the Internal Revenue Code, or to a qualified defined contribution plan described in Section 401(a) or 403(a) of the Internal Revenue Code that agrees to separately account for amounts so transferred, including to separately account for the portion of such distribution which is includable in gross income and the portion that is not so includable; for distributions made on or after January 1, 2007, such portion may also be transferred to an annuity contract described in Section 403(b) of the Internal Revenue Code of 1986, as amended, or to a qualified defined benefit plan described in Section 401(a) of the Internal Revenue Code of 1986, as amended, that agrees to separately account for amounts so transferred, including to separately account for the portion of such distribution which is includable in gross income and the portion that is not so includable; and for distributions made on or after January 1, 2008, such portion may also be transferred to a Roth IRA described in Section 408A of the Internal Revenue Code of 1986, as amended.

  3.  The board of trustees shall, at least thirty days, but not more than ninety days, before making an eligible rollover distribution, provide a written explanation to the distributee in accordance with the requirements of Section 402(f) of the Internal Revenue Code.

  4.  If the eligible rollover distribution is not subject to Sections 401(a) and 417 of the Internal Revenue Code, such eligible rollover distribution may be made less than thirty days after the distributee has received the notice described in subsection 3 of this section, provided that:

  (1)  The board of trustees clearly informs the distributee of the distributee's right to consider whether to elect a direct rollover, and if applicable, a particular distribution option, for at least thirty days after the distributee receives the notice; and

  (2)  The distributee, after receiving the notice, affirmatively elects a distribution.

  5.  Notwithstanding any provision of sections 86.200 to 86.366 to the contrary, in no event shall the trustees pay an eligible rollover distribution in the amount of five thousand dollars or less to a member or retired member who has not attained age sixty-two unless such member or retired member consents in writing either to receive such distribution in cash or to have such distribution directly rolled over in accordance with the provisions of this section.

­­--------

(L. 1995 H.B. 260, et al. § 2, A.L. 2000 H.B. 1808, A.L. 2002 H.B. 1455, A.L. 2006 S.B. 871, A.L. 2011 H.B. 358)