Current through Register Vol. 50, No. 6, December 1, 2023
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
61.645(9)(g) requires the
Board of Trustees of the Kentucky Retirement Systems to promulgate
administrative regulations necessary or proper in order to carry out the
provisions of
KRS
16.505 to
16.652,
61.510
to
61.705,
and
78.510
to
78.852.
This administrative regulation establishes what constitutes eligible rollover
distributions, eligible retirement plans, distributions, distributees, and
direct rollovers for purposes of compliance with
26 U.S.C.
401(a).
Section 1. "Eligible rollover distribution"
shall include any distribution of all or any portion of the balance to the
credit of the distributee, except:
(1) Any
distribution that is one (1) of a series of substantially equal periodic
payments made at least annually:
(a) For the
life or life expectancy of the distributee and the distributee's designated
beneficiary;
(b) The joint lives or
joint life expectancies of the distributee and the distributee's designated
beneficiary; or
(c) For a specified
period of ten years or more;
(2) Any distribution to the extent the
distribution is required under
26 U.S.C.
401(a)(9), except as
provided in Section 2 of this administrative regulation;
(3) The portion of any distribution that is
not includable in gross income; and
(4) Any other distribution that is reasonably
expected to total less than $200 during the year.
Section 2.
(1) Effective January 1, 2002, a portion of a
distribution shall not fail to be an eligible rollover distribution merely
because the portion consists of after-tax employee contributions that are not
includable in gross income. However, this portion may be transferred:
(a) Only to:
1. An individual retirement account or
annuity described in
26 U.S.C. 408(a) or
(b);
2. A qualified defined contribution plan
described in
26 U.S.C.
401(a);
3. On or after January 1, 2007, a qualified
defined benefit plan described in
26 U.S.C.
401(a); or
4. An annuity contract described in
26 U.S.C.
403(b); and
(b) An account or plan provided
for in Section 2(1)2.-4. of this administrative regulation that agrees to
separately account for amounts so transferred, and earnings on those amounts,
including separately accounting for the portion of the distribution:
1. That is includable in gross income;
and
2. That is not so
includable.
(2) Effective January 1, 2002, the definition
of eligible rollover distribution shall also include a distribution to a
surviving spouse, or to a spouse or former spouse who is an alternate payee
under a qualified domestic relations order, as defined in
26 U.S.C.
414(p).
(3) "Eligible retirement plan" shall include
any of the following that accepts the distributee's eligible rollover
distribution:
(a) An individual retirement
account described in
26 U.S.C.
408(a);
(b) An individual retirement annuity
described in
26 U.S.C.
408(b);
(c) An annuity plan described in
26 U.S.C.
403(a);
(d) A qualified trust described in
26 U.S.C.
401(a);
(e) Effective January 1, 2002, an annuity
contract described in
26 U.S.C.
403(b),
(f) Effective January 1, 2002, a plan
eligible under
26
U.S.C. 457(b) that is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or a political subdivision of a state that agrees to
separately account for amounts transferred into that plan from the retirement
system, or
(g) Effective January 1,
2008, a Roth IRA described in
26
U.S.C. 408A.
(4)
(a)
"Distributee" shall include an employee or former employee and the following:
1. The employee's or former employee's
surviving spouse; and
2. The
employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order as defined in
26 U.S.C.
414(p).
(b) Effective January 1, 2007, a "distribute"
shall also include a nonspouse beneficiary who is a designated beneficiary as
defined by
26 U.S.C.
401(a)(9)(E). However, a
nonspouse beneficiary may rollover the distribution only to an individual
retirement account or individual retirement annuity established for the purpose
of receiving the distribution, and the account or annuity shall be treated as
an inherited individual retirement account or annuity.
(c) "Direct rollover" shall include a payment
by the plan to the eligible retirement plan specified by the
distributee.
35 Ky.R. 1094;
1721; eff. 2-6-2009; TAm eff. 3-5-2019; Crt eff.
3-5-2019.
STATUTORY AUTHORITY:
KRS
61.645(9)(e)
