Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: KRS 16.510-16.652, 61.515-61.705, 78.520-78.852,
26 U.S.C.
secs. 401(a)(31),
402(c),
408(d)(3)
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
61.552(16)(h) authorizes an
employee to purchase service credit in the Kentucky Retirement Systems by
rollover or transfer of funds from a retirement plan or deferred compensation
arrangement, to the extent allowed under the Internal Revenue Code. This
administrative regulation establishes the procedures and forms for making
purchases by rollover or transfer.
Section
1.
(1)
(a) An employee eligible to purchase service
credit under
KRS
16.510 to
16.652,
61.515
to
61.705,
or
78.520
to
78.852
may purchase the service by transferring funds through a direct
trustee-to-trustee transfer, as permitted under applicable sections of the
Internal Revenue Code and associated regulations or rulings.
(b) Service credit may also be purchased
through a direct rollover, as contemplated by and permitted under
26 USC
sec. 401(a)(31) and
associated regulations or rulings.
(c) Service credit may also be purchased by a
rollover of funds pursuant to and permitted under
26 USC sec.
402(c) or
408(d)(3).
(d) The Kentucky Retirement Systems shall
accept the transfer or rollover to the extent permitted by law, as specified in
the applicable provisions of the Internal Revenue Code and associated
regulations and rulings.
(2) The retirement system shall not accept a
rollover or transfer of funds from a retirement plan or deferred compensation
arrangement unless the employee has obtained a calculation of the cost of the
service from the retirement system.
Section 2.
(1) An employee who intends to rollover or
transfer eligible funds from a retirement plan or deferred compensation
arrangement shall complete Section 1 of "Form 4170, Direct Transfer/Rollover
Authorization Form".
(2) The
financial institution or plan administrator responsible for the employee's
account in the retirement plan or deferred compensation arrangement shall
complete Section 2 of "Form 4170, Direct Transfer/Rollover Authorization
Form".
(3) The completed "Form
4170, Direct Transfer/Rollover Authorization Form", shall be filed at the
retirement system by the payment due date. A completed form not filed by the
payment due date shall be void.
(4)
The financial institution shall complete the rollover or transfer within sixty
(60) days from the payment due date.
Section 3. If the employee is making a lump
sum purchase by rollover or transfer from a retirement plan or deferred
compensation arrangement and the total distribution amount at the time of
transfer or rollover by the financial institution or plan administrator
responsible for the employee's account in the retirement plan or deferred
compensation arrangement is less than total cost of the service:
(1) Upon notification, the employee shall pay
the additional cost by the purchase due date.
(2) If the transfer or rollover amount is not
known until after the date the purchase was due, the employee shall have ten
(10) working days from the date of notification to submit the additional cost
due.
(3) If the employee does not
file the payment in the retirement office by the date the purchase is due, the
retirement system shall credit the employee's account with the maximum service
credit that may be purchased under the applicable statute for the type of
service, whether in months or increments, by an amount equal to or less than
the total distribution. The retirement system shall return any excess amount to
the retirement plan or deferred compensation arrangement.
Section 4. If the total distribution amount
at the time of transfer or rollover by the financial institution or plan
administrator responsible for the employee's account in the retirement plan or
deferred compensation arrangement is less than total cost of the service, and
the employee is paying the remaining principal of an installment purchase
agreement under
KRS
61.552(16):
(1) The employee shall pay the additional
cost due within sixty (60) days of termination of the installment purchase
agreement.
(2) If the employee does
not file the payment in the retirement office by the date the purchase is due
or within sixty (60) days of termination of the installment purchase agreement,
the retirement system shall return the total distribution to the retirement
plan or deferred compensation arrangement.
Section 5. If the actual total distribution
at the time of transfer by the financial institution responsible for the
employee's account in the retirement plan or deferred compensation arrangement
is greater than the amount certified on Form 4170, Direct Transfer/Rollover
Authorization Form, the amount in excess of the cost of the service shall be
returned:
(1) First, to the employee from
funds, if any, paid by the employee toward the service purchase; or
(2) Second, to the financial institution
responsible for the employee's account in the retirement plan or deferred
compensation arrangement.
Section
6. Incorporation by Reference.
(1) "Form 4170, Direct Transfer/Rollover
Authorization Form, April 2002", Kentucky Retirement Systems, is incorporated
by reference.
(2) This material may
be inspected, copied, or obtained, subject to applicable copyright law, at the
Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road,
Frankfort, Kentucky, Monday through Friday, 8 a.m. to 4:30 p.m.
STATUTORY AUTHORITY:
KRS
61.645(9)(e)