Accepting Rollovers to Qualified Plans

In April 2014, the IRS issued Revenue Ruling 2014-9 which provides guidance for accepting rollovers into a qualified plan. If your plan allows for rollovers, before accepting the rollover, the Plan Administrator must reasonably conclude that the rollover contribution is a valid rollover contribution (under 26 CFR §1.401(a)(31)-1, Q&A-14(b)(2)).  The following summarizes that guidance:

  • If the rollover is coming from another qualified plan (for example, a 401(k) Profit Sharing Plan), go to the EFAST2 website to review that plan’s most recent Form 5500 series filing.  Specifically, under ‘Plan Characteristics,’ look for code 3C to indicate the plan is NOT intended to be qualified.  If you see this code, you would not be able to accept the rollover.
  • If a check is received with an indication that the source of the funds is a traditional IRA (like an attached check stub), the Plan Administrator can reasonably conclude it is not an inherited IRA (unless there is evidence to the contrary).  The employee should certify that the rollover includes no after-tax or Roth amounts (unless your plan specifically accepts after-tax or Roth rollovers).  If the employee has attained age 70 1/2 before the end of the year in which the check is issued, the Plan Administrator also must ensure any required minimum distribution (RMD) was issued from the IRA prior to accepting the rollover.
  • In the event funds are received via wire or other electronic means, the Plan Administrator will need to collect written confirmation detailing what type of account the funds are coming from, and follow the above guidelines accordingly.
  • The Plan Administrator must retain evidence of its best efforts to conclude the rollover is valid.

Amanda is the Chief Operating Officer at Pinnacle Plan Design, LLC

Amanda Rae Iverson

Pinnacle Plan Design is a third-party administrator (TPA) of employer-sponsored qualified retirement plans. We specialize in retirement plan design, administration and actuarial consulting. Pinnacle has offices in Tucson and Phoenix, Arizona (AZ) as well as Houston, Texas (TX), and we proudly serve clients nationwide.

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