N.J. Admin. Code § 17:7-12.13

Current through Register Vol. 56, No. 23, December 2, 2024

Section 17:7-12.13 - Direct rollovers

(a) Notwithstanding any provision of the ACTS to the contrary that would otherwise limit a distributee's election, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution that is equal to at least $ 500.00 paid directly to an eligible retirement plan specified by the distributee in a direct rollover. If an eligible rollover distribution is less than $ 500.00, a distributee may not make the election set forth in this section to roll over only a portion of the eligible rollover distribution.

(b) Definitions. For purposes of this section, the following definitions apply.

"Direct rollover" means a payment by the ACTS to the eligible retirement plan specified by the distributee.

"Distributee" includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employees' spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in IRC § 414(p), are distributees with regard to the interest of the spouse or former spouse. A distributee also includes the participant's nonspouse designated beneficiary. In the case of a nonspouse beneficiary, the direct rollover may be made only to an individual retirement account or annuity described in IRC § 408(a) or (b) (IRA) that is established on behalf of the beneficiary and that will be treated as an inherited IRA pursuant to the provisions of IRC § 402(c)(11). The determination of any required minimum distribution under IRC § 401(a)(9) that is ineligible for rollover shall be made in accordance with IRS Notice 2007-7, Q&A-17 and 18, 2007 I.R.B. 395.

"Eligible retirement plan" means a qualified plan described in IRC § 401 (a), an annuity plan described in IRC § 403(a), an annuity contract described in IRC § 403(b), an individual retirement account or annuity described in IRC § 408(a) or (b), a Roth individual retirement plan under IRC § 408A, or an eligible plan under IRC § 457(b), which is maintained by a state and which agrees to separately account for amounts transferred into such plan from the ACTS, that accepts the distributee's eligible rollover distribution. The definition of eligible retirement plan shall also apply in the case of 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 IRC § 414(p).

"Eligible rollover distribution" means any distribution of all or any portion of the distributee's account balance, except that an eligible rollover distribution does not include:

1. Any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a period of 10 years or more;

2. Any distribution to the extent such distribution is required under IRC § 401(a)(9) (other than amounts that would have been required but for a statutory waiver of the IRC § 401 (a)(9) requirements);

3. Any hardship distribution;

4. The portion of any other distribution(s) that is not includible in gross income;

5. Any distribution(s) that is reasonably expected to total less than $ 200.00 during a year;

6. Any corrective distribution of excess amounts under IRC § 402(g) and/or 415(c) and income allocable thereto; and

7. Any loans that are treated as deemed distributions pursuant to IRC § 72(p).

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 includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in IRC § 408(a) or (b), or by direct rollover to a qualified plan described in IRC § 401(a) or a tax-sheltered annuity described in IRC § 403(b) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution that is includible in gross income and the portion of such distribution that is not includible.

(c) Each pension provider shall provide, within a reasonable time period before making an eligible rollover distribution, a written explanation to the participant that satisfies the requirements of IRC § 402(f).

(d) This subsection shall apply to the Roth elective deferrals.

1. A direct rollover of a distribution from a Roth elective deferral account under the ACTS will only be made to another Roth elective deferral account under an applicable retirement plan described in IRC § 402A(e)(1) or to a Roth IRA described in IRC § 408A, and only to the extent the rollover is permitted under IRC § 402(c).

2. The ACTS will not provide for a direct rollover (including an automatic rollover) for distributions from a participant's Roth elective deferral account if the amounts of the distributions that are eligible rollover distributions are reasonably expected to total less than $ 200.00 during a year. In addition, any distribution from a participant's Roth elective deferral account is not taken into account in determining whether distributions from a participant's other accounts are reasonably expected to total less than $ 200.00 during a year. However, eligible rollover distributions from a participant's Roth elective deferral account are taken into account in determining whether the total amount of the participant's accumulated benefits under the ACTS exceeds $ 1,000 for purposes of mandatory distributions from the ACTS.

3. The provisions of the ACTS that allow a participant to elect a direct rollover of only a portion of an eligible rollover distribution but only if the amount rolled over is at least $ 500.00 is applied by treating any amount distributed from the participant's Roth elective deferral account as a separate distribution from any amount distributed from the participant's other accounts in the ACTS, even if the amounts are distributed at the same time.

N.J. Admin. Code § 17:7-12.13

Adopted by 50 N.J.R. 1616(a), effective 7/16/2018