TEFRA 242(b) Election

[Guest chg]

Is there any authority out there re whether a distribution pursuant to a TEFRA 242(b)election is an "eligible rollover election"? It technically is not a distribution under 401(a)(9).

[Guest]

Would need more information to comment. IMHO, only the portion of the delayed distribution that exceeds the MRD (calculated as if the TEFRA election had not been made) is an ERD. This seems to be the methodology used in the proposed 401(a)(9) regs where there is some discussion of the impact of revoking a TEFRA 242(B) election.

Perhaps the more important issue is whether you even have a valid TEFRA election in the first place. The IRS has issued a notice and some PLRs that take a pretty tough interpretation of what appears to be a relatively simple statutory provision.

[Guest chg]

I believe the TEFRA election is valid. So you are saying that if the participant revokes his election by changing the distribution method, the amount that should have been paid out under 401(a)(9) is not rollover eligible, but any amount in excess can be rolled over. One of the PLRs seemed to indicate that the excess amount could be rolled over, but that PLR was issued prior to the Unemployment Compensation Amendments Act, and thus prior to the current definition of "eligible rollover distribution."