Retirement plan distributions: Distributions of tax-qualified retirement plan assets to plan participants receive only limited post-bankruptcy protection under BAPCPA; however, "eligible rollover distributions
" remain exempt after distribution.
If a qualified retirement plan distributes an annuity contract to a participant, amounts paid under that contract are considered to be payments of the balance of the participant's credit and may be treated as eligible rollover distributions
to the extent they would otherwise qualify.
Eligible rollover distributions
received from an eligible
The bill would also provide that eligible rollover distributions
from qualified retirement plans, Section 403(b) annuities, IRAs, and governmental Section 457 plans could generally be rolled over to any such plan or arrangements.
The current-law, 20-percent withholding rate for eligible rollover distributions
Eligible Rollover Distributions
. Only a qualified plan participant can make an "eligible rollover" of a distribution to another qualified plan or to an IRA.
An IRS spokesperson advised that the reg writers had not initially considered this issue, but now agree that distributions in excess of the RMD for 2001 as figured under the new rules are eligible rollover distributions
* Sec 401(a)(31): A qualified trust must provide for a direct trustee-to-trustee transfer (a direct rollover) of eligible rollover distributions
. For previously taxed amounts, the limits described in the preceding paragraph apply.
402(c) "eligible rollover distributions
," because amounts were paid from the employer's general assets, not from a qualified trust.
402(f) notice on eligible rollover distributions
to explain the new default option.
The IRS also ruled that the proposed payments would not be taxable to the participants when made to the plan; rather, when they are distributed from the plan, they will constitute eligible rollover distributions
Hardship distributions are eligible rollover distributions
and would be subject to 20% income tax withholding unless directly rolled over trustee-to-trustee to an IRA.