(a) This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the retirement ordinance to the contrary that would limit a distributee’s election under this subsection, a distributee may elect, at the time and in the manner prescribed by the Board of Trustees, to have any portion of an eligible rollover distribution paid directly, as a direct rollover, to an eligible retirement plan specified by the distributee. The following definitions shall apply with regard to this subsection.
(1) ELIGIBLE ROLLOVER DISTRIBUTION. An ELIGIBLE ROLLOVER DISTRIBUTION is any distribution of all or a portion of the balance to the credit of the distributee, except an eligible rollover distribution does not include: (i) any distribution that is one of a series of substantially equal periodic payments not less frequently than annually made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; and (ii) any distribution to the extent the distribution is required under Internal Revenue Code § 401(a)(9) for purposes of the direct rollover provision, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includable in gross income. However, such portion may be paid only to an individual retirement account or annuity described in IRC § 408(a) or (b), or to a qualified plan described in §§ 401(a) or 403(b) of the IRC, that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includable in gross income and the portion of such distribution which is not so includable.
(2) ELIGIBLE RETIREMENT PLAN. An ELIGIBLE RETIREMENT PLAN means as follows: (1) an individual retirement account described in IRC § 408(A); (2) an individual retirement annuity described in IRC § 408(B); (3) an annuity plan described in IRC § 403(a); (4) effective January 1, 2002, an annuity contract described in IRC § 403(B); (5) effective January 1, 2002, an eligible plan under IRC § 457 which is maintained by a state or political subdivision of a state or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this retirement system; (6) a qualified trust described in IRC § 401(a) that accepts eligible rollover distributions; or (7) effective January 1, 2008, a Roth IRA, subject to the requirements of IRC § 408A(c)(3).
(3) DISTRIBUTEE. A DISTRIBUTEE includes an employee or former employee. In addition, the employee’s or former employee’s surviving spouse or former spouse who is an alternate payee under a domestic relations order is a distributee with regard to the interest of the surviving spouse. Effective July 1, 2010, the non-spouse beneficiary of a member or former member also may be a distributee with regard to the interest of the non-spouse beneficiary that is directly transferred to an individual retirement account described in IRC § 408(a) or an individual retirement annuity described in IRC § 408(b).
(4) DIRECT ROLLOVER. A DIRECT ROLLOVER is a payment by the retirement system to the eligible retirement plan specified by the distributee.
(b) The retirement system will accept an eligible rollover distribution for the purchase of credited service, and for the repayment of previously withdrawn accumulated contributions. Upon receipt of sufficient documentation that the plan from which a distribution is to occur is qualified in accordance with applicable IRC provisions, the retirement system will accept a rollover distribution from the following:
(1) An individual retirement account or annuity described in IRC § 408(a) or 408(b) that is eligible to be rolled over and would otherwise be includable in gross income;
(2) A qualified plan described in IRC §§ 401(a) or 403(a), including after-tax employee contributions;
(3) An annuity contract described in IRC § 403(b), excluding after-tax employee contributions; and
(4) An eligible plan under IRC § 457(b) which is maintained by a State, political subdivision of a State, or any agency or instrumentality of a State or political subdivision of a state. The retirement system shall provide a separate accounting for any after-tax contributions received and earnings thereon.
(Ord. 3318, passed 1-8-1996; Ord. 3590, passed 6-24-2004; Ord. 3816, passed 2-16-2012)