Qualified Plan Loan Offset Amounts (QPLO)

The Direct Rollover option is not mandated for QPLO distributions.   The QPLO amount, however, is still an eligible rollover distribution.

Q.:  What must the disclosure statement contain?

If you're referring to the 402(f) special tax notice, I would direct you to the model 402(f) notice contained in Notice 2020-62. Regarding loan offsets, it provides the following:

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If you have an outstanding loan that is being offset

If you have an outstanding loan from the Plan, your Plan benefit may be offset by the outstanding amount of the loan, typically when your employment ends. The offset amount is treated as a distribution to you at the time of the offset. Generally, you may roll over all or any portion of the offset amount. Any offset amount that is not rolled over will be taxed (including the 10% additional income tax on early distributions, unless an exception applies). You may roll over offset amounts to an IRA or an employer plan (if the terms of the employer plan permit the plan to receive plan loan offset rollovers).

How long you have to complete the rollover depends on what kind of plan loan offset you have. If you have a qualified plan loan offset, you will have until your tax return due date (including extensions) for the tax year during which the offset occurs to complete your rollover. A qualified plan loan offset occurs when a plan loan in good standing is offset because your employer plan terminates, or because you sever from employment. If your plan loan offset occurs for any other reason (such as a failure to make level loan repayments that results in a deemed distribution), then you have 60 days from the date the offset occurs to complete your rollover.

You might also be interested in sections II.B and III of Notice 2018-74, which discusses the changes that were made to the model notice with respect to QPLOs.

There are eight public-sector DB retirement systems in NY.  Seven allow for Direct Rollovers of QPLO distributions.  The eighth, the New York State and Local Retirement System (NYSLRS) does not.  Is this denial a breach of the Fiduciary Standard?