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 di
Eligible rollover distribution payable, election to pay directly toplan--definitions--written explanation required by board,when--distribution made, when--prohibition on eligible rolloverdistributions to certain members, exception.
86.255. 1. Notwithstanding any other provision of the planestablished in sections 86.200 to 86.366, if an eligible rolloverdistribution becomes payable to a distributee, the distributee may elect,at the time and in the manner prescribed by the board of trustees, to haveany of the eligible rollover distribution paid directly to an eligibleretirement 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 thefund to the eligible retirement plan specified by the distributee;
(2) "Distributee", a member, a surviving spouse or a spouse;
(3) "Eligible retirement plan", an individual retirement accountdescribed in Section 408(a) of the Internal Revenue Code, an individualretirement annuity described in Section 408(b) of the Internal RevenueCode, or a qualified trust described in Section 401(a) of the InternalRevenue Code that accepts the distributee's eligible rollover distributionor, effective for eligible rollover distributions made on or after January1, 2002, an annuity contract described in Section 403(b) of the InternalRevenue Code or an eligible plan under Section 457(b) of the InternalRevenue Code which is maintained by a state, political subdivision of astate, or any agency or instrumentality of a state or political subdivisionof a state and which agrees to separately account for amounts transferredinto such plan from this plan, and shall include, for eligible rolloverdistributions made on or after January 1, 2002, a distribution to asurviving spouse or to a spouse or former spouse who is the alternate payeeunder a qualified domestic relations order, as defined in Section 414(p) ofthe Internal Revenue Code;
(4) "Eligible rollover distribution", any distribution of all or anyportion of a member's benefit, other than:
(a) A distribution that is one of a series of substantially equalperiodic payments, made not less frequently than annually, for the life orlife expectancy of the distributee or for the joint lives or joint lifeexpectancies of the distributee and the distributee's designatedbeneficiary, or for a specified period of ten years or more;
(b) The portion of a distribution that is required under Section401(a)(9) of the Internal Revenue Code; or
(c) Effective for distributions made on or after January 1, 2002, aportion of a distribution shall not fail to be an eligible rolloverdistribution merely because the portion consists of after-tax employeecontributions which are not includable in gross income. However, suchportion may be transferred only to an individual retirement account orannuity described in Section 408(a) or (b) of the Internal Revenue Code, orto a qualified defined contribution plan described in Section 401(a) or403(a) of the Internal Revenue Code that agrees to separately account foramounts so transferred, including to separately account for the portion ofsuch distribution which is includable in gross income and the portion thatis not so includable.
3. The board of trustees shall, at least thirty days, but not morethan ninety days, before making an eligible rollover distribution, providea written explanation to the distributee in accordance with therequirements of Section 402(f) of the Internal Revenue Code.
4. If the eligible rollover distribution is not subject to Sections401(a) and 417 of the Internal Revenue Code, such eligible rolloverdistribution may be made less than thirty days after the distributee hasreceived the notice described in subsection 3 of this section, providedthat:
(1) The board of trustees clearly informs the distributee of thedistributee's right to consider whether to elect a direct rollover, and ifapplicable, a particular distribution option, for at least thirty daysafter the distributee receives the notice; and
(2) The distributee, after receiving the notice, affirmatively electsa distribution.
5. Notwithstanding any provision of sections 86.200 to 86.366 to thecontrary, in no event shall the trustees pay an eligible rolloverdistribution in the amount of five thousand dollars or less to a member orretired member who has not attained age sixty-two unless such member orretired member consents in writing either to receive such distribution incash or to have such distribution directly rolled over in accordance withthe 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)