OAR 459-050-0090: Direct Rollover and Trustee-to-Trustee Transfer

The purpose of this rule is to establish the criteria and processes for Direct Rollovers between the Deferred Compensation Program and an Eligible Retirement Plan and Trustee-to-Trustee Transfers between the Deferred Compensation Program and either a defined benefit governmental plan or a deferred compensation plan described in Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. (1) Definitions. The following definitions apply for the purpose of this rule: (a) “Code” means the Internal Revenue Code of 1986, as amended. (b) “Direct Rollover” means: (A) The payment of an eligible rollover distribution by the Deferred Compensation Program to an Eligible Retirement Plan specified by the Distributee; or (B) The payment of an eligible rollover distribution by an Eligible Retirement Plan to the Deferred Compensation Program. (c) “Distributee” means an individual who has requested a distribution under one of the following criteria: (A) A Deferred Compensation Program participant who has a severance of employment; (B) A Deferred Compensation Program participant who is approved for a de minimis distribution under OAR 459-050-0075(1); (C) The surviving spouse of a deceased participant; (D) The spouse or former spouse who is the alternate payee under a domestic relations order that satisfies the requirements of ORS 243.507 and OAR 459-050-0200 to 459-050-0250; or (E) The non-spouse beneficiary of a deceased participant who is a designated beneficiary under Code Section 402(c)(11). (F) A plan participant who has requested a Trustee-to-Trustee Transfer for the purpose of purchasing permissive service credit as described in Code Section 415(n). (d) “Distributing Plan” means an Eligible Retirement Plan that is designated to distribute a direct rollover or send a Trustee-to-Trustee Transfer to another eligible plan (recipient plan). (e) “Eligible Retirement Plan” means any one of the following: (A) An individual retirement account or annuity described in Code Section 408(a) or (b), including a Roth IRA as described in Code Section 408(A); (B) An annuity plan described in Code Section 403(a); (C) An annuity contract described in Code Section 403(b); (D) A qualified trust described in Code Section 401(a); (E) An eligible deferred compensation plan described in Code Section 457(b), which may include a qualified Roth contribution program defined in Code Section 402A, and that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; or (F) A plan described in Code Section 401(k). (f) “Eligible Rollover Distribution” means any distribution of all or any portion of a person’s account in an Eligible Retirement Plan. An Eligible Rollover Distribution may not include: (A) A distribution that is one of a series of substantially equal periodic payments made no less frequently than annually for the life (or life expectancy) of the Distributee or the joint lives (or life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of 10 years or more; (B) A distribution that is a required or minimum distribution under Code Section 401(a)(9); (C) An amount that is distributed due to an unforeseen emergency under OAR 459-050-0075(2). (g) “Recipient Plan” means an Eligible Retirement Plan that is designated by a Distributee to receive a Direct Rollover or Trustee-to-Trustee Transfer. (h) “Trustee-to-Trustee Transfer” means a transfer either: (A) By the Deferred Compensation Program to: (i) A governmental defined benefit plan (within the meaning of Code Section 414(d)) for the purchase of permissive service credit as described in Code Section 415(n); or (ii) A deferred compensation plan described in Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. (B) To the Deferred Compensation Program from a deferred compensation plan described in Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. (2) Direct rollover to an Eligible Retirement Plan. The Direct Rollover of an Eligible Rollover Distribution by the Deferred Compensation Program to an Eligible Retirement Plan shall be interpreted and administered in accordance with Code Section 457(d)(1)(C), 402A(c)(3) and all applicable regulations. A Distributee may elect to have an Eligible Rollover Distribution paid by the Deferred Compensation Program directly to an Eligible Retirement Plan specified by the Distributee. (a) The Deferred Compensation Program staff shall provide each Distributee with a written explanation of the direct rollover rules for an eligible distribution, as required by the Code. (b) A Distributee’s right to elect a Direct Rollover is subject to the following limitations: (A) A Distributee may elect to have an Eligible Rollover Distribution paid as a Direct Rollover to only one Eligible Retirement Plan. (B) A Distributee may elect to have part of an Eligible Rollover Distribution be paid directly to the Distributee, and to have part of the distribution paid as a Direct Rollover only if the Distributee elects to have at least $500 transferred to the Eligible Retirement Plan. (C) A Distributee of the Designated Roth Account may elect to have a Direct Rollover only to a Roth IRA as described in Code Section 408A or another qualified Roth contribution program as described in Code Section 402A. (c) A Direct Rollover election shall be in writing and must be signed by the Distributee or by his or her authorized representative pursuant to a valid power of attorney. The Direct Rollover election may be on forms furnished by the Deferred Compensation Program, or on forms submitted by the Recipient Plan which must include: (A) The Distributee’s full name; (B) The Distributee’s social security number; (C) The Distributee’s account number with the Recipient Plan, if available; (D) The name and complete mailing address of the Recipient Plan; and (E) If the Distributee is a non-spouse beneficiary of the member, the title of the recipient IRA account. (d) The Distributee is responsible for determining that the Recipient Plan’s administrator will accept the Direct Rollover for the benefit of the Distributee. Any taxes or penalties that are the result of the Distributee’s failure to ascertain that the recipient plan will accept the direct rollover shall be the sole liability of the Distributee. (3) Trustee-to-Trustee Transfer to another deferred compensation plan or governmental defined benefit plan. (a) A Trustee-to-Trustee Transfer request shall be in writing and must be signed by the Distributee or by his or her authorized representative pursuant to a valid power of attorney. The Trustee-to-Trustee Transfer request may be on forms furnished by the Deferred Compensation Program, or on forms submitted by the Recipient Plan which must include: (A) The Distributee’s full name; (B) The Distributee’s social security number; (C) The Distributee’s account number with the Recipient Plan, if available; (D) The name and complete mailing address of the Recipient Plan; and (E) If the transfer is for the purpose of purchasing service credit under a governmental defined benefit plan, the exact amount to be transferred. (b) The Distributee is responsible for determining that the Recipient Plan’s administrator will accept the Trustee-to-Trustee Transfer for the benefit of the participant. Any taxes or penalties that are the result of the Distributee’s failure to ascertain that the Recipient Plan will accept the Trustee-to-Trustee Transfer shall be the sole liability of the Distributee. (4) Direct Rollover from an Eligible Retirement Plan. The Deferred Compensation Program may accept rollover contributions from participants and direct rollovers of distributions from an eligible retirement plan on behalf of a participant. This section shall be interpreted and administered in accordance with Code Section 402(c) and all applicable regulations. (a) The Deferred Compensation Program may accept both pre-tax and after-tax rollover money. However, the only after-tax money eligible for rollover into the Deferred Compensation Program is money from another qualified Roth contribution program as described in Code Section 402A. (b) A Direct Rollover from an Eligible Retirement Plan must be an Eligible Rollover Distribution. It is the participant’s responsibility to determine that the assets qualify for rollover treatment. Any taxes or penalties that are the result of the participant’s failure to ascertain that the distributing plan assets qualify for a direct rollover to a deferred compensation plan described in Code Section 457(b), shall be the sole liability of the participant. (c) Subject to the requirements of subsections (4)(c)(A) and (B) below, Eligible Rollover Distribution(s) shall be credited to the participant’s Deferred Compensation Account or Designated Roth Account established pursuant to the Enrollment Form on file with the Deferred Compensation Program and shall be subject to all the terms and provisions of the Enrollment Form. Account assets received from the Distributing Plan will be invested by the Deferred Compensation Program record keeper in accordance with the terms and conditions of the Deferred Compensation Program according to the asset allocation the participant has established for monthly contributions unless instructed otherwise in writing on forms provided by the Deferred Compensation Program. (A) Assets from an Eligible Retirement Plan other than a deferred compensation plan described in Code Section 457(b) will be segregated into a separate account established by the Deferred Compensation Program for tax purposes only, but not for investment purposes. For investment purposes, the participant’s assets are treated as a single account. If a participant changes the allocation of existing assets among investment options within the plan, the transfer or reallocation shall apply to and will occur in all accounts automatically. (B) Assets directly rolled over to the Deferred Compensation Program may be subject to the 10 percent penalty on early withdrawal to the extent that the funds directly rolled over are attributable to rollovers from a qualified plan, a 403(b) annuity, or an individual retirement account. (5) Trustee-to-Trustee Transfer from another deferred compensation plan. The Deferred Compensation Program may accept Trustee-to-Trustee Transfers from other eligible deferred compensation plans described in Code Section 457(b), which may include a qualified Roth contribution program defined in Code Section 402A. Assets transferred from an eligible deferred compensation plan will be aggregated with the participant’s accumulated Deferred Compensation Program account(s).