Rollover Rules: (not a RR 90-24 transfer)

[joel]

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Subject: 403(B) rollover rules (not a 90-24 transfer)

Author: Joel L. Frank

Date: 12/24/2001 5:35 pm PST

I have long taken the view that the triggering events enumerated in sections 403(B)(7)(A)ii and 403(b)11 have NO application to rollover treatment but rather list the earliest date upon which a participant may make a TAXABLE distribution. Apparently I am not alone. In fact, I am in very sound company! Following is an exact quote from "Tax Focus/September 16, 1992". This is a publication of "Standard Federal Tax Reports" published and researched by "CCH" the topical law publishers. Here is the quotation:

..."NEW ROLLOVER RULES:

By eliminating the key requirements that currently exist as a condition for rollover treatment, Congress has taken significant steps to make it easier for individuals to keep their retirement assets in a retirement vehicle. Specifically, the Unemployment Compensation Amendments (UCA) of 1992 eliminated the distinctions between total and partial distributions, the mandatory triggering events, and the one-year distribution requirement for total distributions.

After December 31, 1992, any portion or all of a distribution from a qualified plan or tax sheltered annuity plan (other than a minimum distribution, generally required to begin after age 70.5,) can be rolled over tax-free to another qualified plan, tax sheltered annuity, or IRA with only the following conditions:

(1) it must be rolled over in 60 days, and

(2) it cannot be one of a series of substantially equal periodic payments (not less frequently than annually) made (i) over the life or joint life expectancies of the participant and his beneficiary or (ii) over a specified period of ten years or more.

In short, with the exception of required distributions, nonannuity distributions generally may be rolled over, regardless of the amount or reason for the distribution."

COMMENTARY:

The eliminated mandatory triggering events referred to in the first paragraph can be found under section 403(B)8 prior to January 1, 1993. CCH recognized, along with other practitioners, that effective January 1, 1993 these mandatory triggering events for rollover purposes was repealed. Thus, it is wrong to apply the triggering events under 403(B)(7)(A)ii and 403(b)11 to eligibility for rollover treatment.

Peace,

Joel L. Frank

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403(B) rollover rules (not a Rev. Ruling 90-24 transfer)

Joel L. Frank 12/24/2001 5:35 pm PST

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