Life and Death Planning for Retirement Benefits

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Chapter 2: Income Tax Issues 137
above). Transfers directly from one nonIRA plan to another nonIRA plan are beyond the
scope of this book.
2.6.02 Distributions that can (or can’t) be rolled over
Any distribution from a QRP, IRA, or 403(b) plan may be rolled over except those listed
in A–G below. If income taxes have been withheld rom an eligible rollover distribution
the participant or surviving spouse can nevertheless roll over the withheld amount by substituting
other funds. Reg. A-11; see PLR 2003-44024.
Before 2002, money could be rolled from a traditional IRA to a QRP or 403(b) plan only
if the traditional IRA contained no contributions other than one or more distributions rolled from
the same or another QRP or 403(b) plan, so-called “conduit IRAs.” See
prior to repeal by EGTRRA, and Reg. which is now obsolete. Now, pretax (but
not after-tax; A)) money can be rolled from any IRA “upstream” to a QRP.
Here is a list of the distributions that may NOT be rolled over:
A. Inherited plans. A distribution from an inherited retirement plan may not be rolled over
to the beneficiary’s own plan by any beneficiary other than the participant’s surviving
spouse. For more on that rule, and the ability of a nonspouse Designated Beneficiary to
transfer inherited nonIRA plan benefits via direct rollover to an “inherited” IRA, see
For the ability of the surviving spouse to roll over benefits paid to her, see ¶ 3.2.
B. RMD. A required minimum distribution RMD; cannot be rolled over. See
C. Series payments. “[A]ny distribution which is one of a series of substantially equal
periodic payments” made annually or more often (1) over the life or life expectancy of the
participant, (2) over the joint life or life expectancy of the participant and a designated
beneficiary, or (3) over a “specified period of 10 years or more” may not be rolled over.
Reg. A-5, explains how to determine whether a distribution is
part of a series of substantially equal payments.
D. Corrective and deemed distributions. Certain corrective or “deemed” distributions
cannot be rolled over. See Reg. A-4, for list.
E. Hardship distributions. Hardship distributions cannot be rolled over.
F. 12-month limitation on IRA rollovers. See for a limit on the number of IRA
distributions that may be rolled to another IRA within 12 months.
G. Plan loans. A plan loan that is deemed distributed under § 72(p) (because the loan does
not conform with the plan-loan rules) is not an eligible rollover distribution. A “plan loan
offset” distribution (when the plan pays itself back out of the participant’s account) is an
eligible rollover distribution. See
H. After-tax money. Both pre- and after-tax money may be rolled over from a QRP to a
traditional IRA; see C). (Reg. A-3, which provides to the contrary,