Publication 571 - Tax-Sheltered Annuity Plans (403(B) Plans) Page 14
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21gov/pub/irs-irbs/irb11-01.pdf, or see the latest
make the rollover directly to a traditional IRA,
roll over the qualifying distribution attributable to
annual update.
Roth IRA, or new plan. Before you receive a
the employee. You can make the rollover to any
distribution, your plan will give you information
eligible retirement plan.
In determining whether to grant a waiver, the
on this. It is generally to your advantage to
After you roll money and other property over
IRS will consider all relevant facts and circum-
choose this option because your plan will not
from a 403(b) plan to an eligible retirement plan,
stances, including:
withhold tax on the distribution if you choose it.
and you take a distribution from that plan, you
1. Whether errors were made by the financial
will not be eligible to receive the capital gain
institution;
treatment or the special averaging treatment for
Distribution received by you. If you receive
the distribution.
a distribution that qualifies to be rolled over, you
2. Whether you were unable to complete the
rollover due to death, disability, hospitali-
can roll over all or any part of the distribution.
Second rollover. If you roll over a qualifying
Generally, you will receive only 80% of the distri-
zation, incarceration, restrictions imposed
distribution to a traditional IRA, you can, if cer-
bution because 20% must be withheld. If you roll
by a foreign country, or postal error;
tain conditions are satisfied, later roll the distri-
over only the 80% you receive, you must pay tax
bution into another 403(b) plan. For more
3. Whether you used the amount distributed
on the 20% you did not roll over. You can re-
information, see IRA as a holding account (con-
(for example, in the case of payment by
place the 20% that was withheld with other
duit IRA) for rollovers to other eligible plans in
check, whether you cashed the check);
money within the 60-day period to make a 100%
chapter 1 of Publication 590.
and
rollover.
4. How much time has passed since the date
Nonspouse beneficiary. A nonspouse bene-
of distribution.
Voluntary deductible contributions. For tax
ficiary may make a direct rollover of a distribu-
years 1982 through 1986, employees could
For additional information on rollovers, see
tion from a 403(b) plan of a deceased participant
make deductible contributions to a 403(b) plan
Publication 590.
if the rollover is a direct transfer to an inherited
under the individual retirement arrangement
IRA established to receive the distribution. If the
Eligible retirement plans. The following
(IRA) rules instead of deducting contributions to
rollover is a direct trustee-to-trustee transfer to
are considered eligible retirement plans.
a traditional IRA.
an IRA established to receive the distribution:
•
If you made voluntary deductible contribu-
Individual retirement arrangements.
•
The transfer will be treated as an eligible
tions to a 403(b) plan under these traditional IRA
•
Roth IRA.
rollover distribution.
rules, the distribution of all or part of the accumu-
•
lated deductible contributions may be rolled over
Qualified retirement plans. (To determine
•
The IRA will be considered an inherited
if it otherwise qualifies as a distribution you can
if your plan is a qualified plan, ask your
account.
roll over. Accumulated deductible contributions
plan administrator.)
•
The required minimum distribution rules
are the deductible contributions:
•
403(b) plans.
that apply in instances where the partici-
•
Plus
•
pant dies before the entire interest is dis-
Government eligible 457 plans.
tributed will apply to the transferred IRA.
1. Income allocable to the contributions,
If the distribution is from a designated Roth ac-
2. Gain allocable to the contributions, and
For more information on IRAs, see Publica-
count, then the only eligible retirement plan is
tion 590.
•
another designated Roth account or a Roth IRA.
Minus
Frozen deposits. The 60-day period usually
1. Expenses and losses allocable to the con-
tributions, and
allowed for completing a rollover is extended for
Nonqualifying distributions. You cannot
any time that the amount distributed is a frozen
roll over tax free:
2. Distributions from the contributions, in-
deposit in a financial institution. The 60-day pe-
•
come, or gain.
Minimum distributions (generally required
riod cannot end earlier than 10 days after the
to begin at age 70
/
),
1
2
deposit ceases to be a frozen deposit.
•
Substantially equal payments over your
A frozen deposit is any deposit that on any
Excess employer contributions. The portion
life or life expectancy,
day during the 60-day period cannot be with-
of a distribution from a 403(b) plan transferred to
drawn because:
•
a traditional IRA that was previously included in
Substantially equal payments over the
income as excess employer contributions (dis-
joint lives or life expectancies of your ben-
1. The financial institution is bankrupt or in-
cussed earlier) is not an eligible rollover distribu-
eficiary and you,
solvent, or
tion.
•
Substantially equal payments for a period
2. The state where the institution is located
Its transfer does not affect the rollover treat-
of 10 years or more,
ment of the eligible portion of the transferred
has placed limits on withdrawals because
•
one or more banks in the state are (or are
amounts. However, the ineligible portion is sub-
Hardship distributions, or
about to be) bankrupt or insolvent.
ject to the traditional IRA contribution limits and
•
Corrective distributions of excess contribu-
may create an excess IRA contribution subject
tions or excess deferrals, and any income
to a 6% excise tax (see chapter 1 of Publication
allocable to the excess, or excess annual
590).
additions and any allocable gains.
Gift Tax
Rollover of nontaxable amounts.
You may
Qualified domestic relations order. You
be able to roll over the nontaxable part of a
may be able to roll over tax free all or any part of
If, by choosing or not choosing an election, or
distribution (such as your after-tax contributions)
an eligible rollover distribution from a 403(b)
option, you provide an annuity for your benefi-
made to another eligible retirement plan, tradi-
plan that you receive under a qualified domestic
ciary at or after your death, you may have made
tional IRA, or Roth IRA. The transfer must be
relations order (QDRO). If you receive the inter-
a taxable gift equal to the value of the annuity.
made either through a direct rollover to an eligi-
est in the 403(b) plan as an employee’s spouse
ble plan that separately accounts for the taxable
or former spouse under a QDRO, all of the
and nontaxable parts of the rollover or through a
Joint and survivor annuity. If the gift is an
rollover rules apply to you as if you were the
rollover to a traditional IRA or Roth IRA.
interest in a joint and survivor annuity where only
employee. You can roll over your interest in the
If you roll over only part of a distribution that
you and your spouse have the right to receive
plan to a traditional IRA or another 403(b) plan.
payments, the gift will generally be treated as
includes both taxable and nontaxable amounts,
For more information on the treatment of an
qualifying for the unlimited marital deduction.
the amount you roll over is treated as coming
interest received under a QDRO, see Publica-
first from the taxable part of the distribution.
tion 575.
More information. For information on the gift
Direct rollovers of 403(b) plan distributions.
Spouses of deceased employees. If you are
tax, see Publication 950, Introduction to Estate
You have the option of having your 403(b) plan
the spouse of a deceased employee, you can
and Gift Taxes.
Chapter 8 Distributions and Rollovers
Page 14
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