Notice - Election.
A. This section applies to distributions made on or after
January 1, 2002. Notwithstanding any provision of the System to the
contrary that would otherwise limit a Distributee's election
hereunder, a Distributee, including a nonspouse designated
beneficiary, to the extent permitted under paragraph 3 of subsection
B of this section, may elect, at the time and in the manner
prescribed by the Board, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified
by the Distributee in a Direct Rollover.
B. As used in this section:
1. "Eligible Rollover Distribution" means any distribution of
all or any portion of the balance to the credit of the Distributee,
except that an Eligible Rollover Distribution does not include: 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 life
expectancies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of ten (10) years or more;
any distribution to the extent such distribution is required under
Section 401(a)(9) of the Internal Revenue Code of 1986, as amended;
and the portion of any distribution that is not includable in gross
income. A portion of a distribution shall not fail to be an
Eligible Rollover Distribution merely because the portion consists
of after-tax member contributions which are not includable in gross
income. However, such portion may be transferred only:
a. from January 1, 2002, through December 31, 2006:
(1) to an individual retirement account or annuity
described in Section 408(a) or (b) of the
Internal Revenue Code of 1986, as amended, or
(2) in a direct trustee-to-trustee transfer, to a
qualified trust which is part of a defined
contribution plan 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, and
b. on or after January 1, 2007:
(1) to an individual retirement account or annuity
described in Section 408(a) or (b) of the
Internal Revenue Code of 1986, as amended, or
(2) in a direct trustee-to-trustee transfer to a
qualified trust or an annuity contract described
in Section 403(b) of the Internal Revenue Code of
1986, as amended, and such trust or contract
provides for separate accounting for amounts so
transferred (and earnings thereon), 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.
Effective for distributions after December 31, 2007, such after-
tax portion may also be directly transferred to a Roth individual
retirement account or annuity described in Section 408A of the
Internal Revenue Code of 1986, as amended, ("Roth IRA"), subject to
any limitations described in Section 408A(c) of the Internal Revenue
Code of 1986, as amended;
2. "Eligible Retirement Plan" means an individual retirement
account described in Section 408(a) of the Internal Revenue Code of
1986, as amended, an individual retirement annuity described in
Section 408(b) of the Internal Revenue Code of 1986, as amended, an
annuity plan described in Section 403(a) of the Internal Revenue
Code of 1986, as amended, or a qualified trust described in Section
401(a) of the Internal Revenue Code of 1986, as amended, that
accepts the Distributee's Eligible Rollover Distribution. Effective
January 1, 2002, an Eligible Retirement Plan shall also mean an
annuity contract described in Section 403(b) of the Internal Revenue
Code of 1986, as amended, and an eligible plan under Section 457(b)
of the Internal Revenue Code of 1986, as amended, 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 and which agrees to separately account for amounts transferred
into such plan from the System. Effective for distributions after
December 31, 2007, an Eligible Retirement Plan includes a Roth IRA,
subject to any limitations under Section 408A(c) of the Internal
Revenue Code of 1986, as amended. Effective for distributions after
December 18, 2015, an Eligible Retirement Plan includes a SIMPLE IRA
in accordance with Section 408(p)(1)(B) of the Internal Revenue Code
of 1986, as amended, for purposes of a rollover contribution to such
SIMPLE IRA, but only if such rollover contribution is made after
December 18, 2015, and only if such rollover contribution occurs
after the two-year period described in Section 72(t)(6) of the
Internal Revenue Code of 1986, as amended;
3. "Distributee" means an employee or former employee. In
addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic order, as defined in
subsection B of Section 2-303.3 of this title, are Distributees with
regard to the interest of the spouse or the former spouse. A
Distributee also includes the member's nonspouse designated
beneficiary (and certain trusts described in Section 402(c)(11)(B)
of the Internal Revenue Code of 1986, as amended), pursuant to
Section 401(a)(9)(E) of the Internal Revenue Code of 1986, as
amended, who may elect any portion of a payment to be made in a
Direct Rollover only to an individual retirement account or annuity
(other than an endowment contract) described in Section 408(a) or
(b) of the Internal Revenue Code of 1986, as amended, ("IRA")
(including, effective for distributions after December 18, 2015, a
SIMPLE IRA, but only if such contribution occurs after the two-year
period described in Code Section 72(t)(6) and is made in accordance
with the Protecting Americans from Tax Hikes Act of 2015), or,
effective for distributions after December 31, 2007, to a Roth IRA,
that is established on behalf of such nonspouse designated
beneficiary for the purpose of receiving the distribution and that
will be treated as an inherited IRA pursuant to the provisions of
Section 402(c)(11) of the Internal Revenue Code of 1986, as amended.
Also, in this case, the determination of any required minimum
distribution under Section 401(a)(9) of the Internal Revenue Code of
1986, as amended, that is ineligible for rollover shall be made in
accordance with Notice 2007-7, Q&A 17 and 18, 2007-5 Internal
Revenue Bulletin 395. The required minimum distribution rules of
Section 401(a)(9)(B) (other than clause iv thereof) of the Internal
Revenue Code of 1986, as amended, apply to the transferee IRA; and
4. "Direct Rollover" means a payment by the System to the
Eligible Retirement Plan specified by the Distributee.
C. At least thirty (30) days before and, effective for years
beginning after December 31, 2006, not more than one hundred eighty
(180) days before the date of distribution, the Distributee (other
than a nonspouse designated beneficiary prior to July 1, 2010) must
be provided with a notice of rights which satisfies Section 402(f)
of the Internal Revenue Code of 1986, as amended, as to rollover
options and tax effects. Such distribution may commence less than
thirty (30) days after the notice is given, provided that:
1. The Board clearly informs the Distributee that the
Distributee has a right to a period of at least thirty (30) days
after receiving the notice to consider the decision of whether or
not to elect a distribution; and
2. The Distributee, after receiving the notice, affirmatively
elects a distribution.
D. For distributions made after December 31, 2006, but prior to
July 1, 2010, a distribution with respect to a nonspouse designated
beneficiary shall be made in accordance with Notice 2007-7, Q&A 15,
2007-5 Internal Revenue Bulletin 395. Effective for plan years
beginning after December 31, 2009, a distribution with respect to a
nonspouse designated beneficiary shall be subject to Sections
401(a)(31), 402(f) and 3405(c) of the Internal Revenue Code of 1986,
as amended.
E. Effective for distributions after December 31, 2014, for
purposes of determining the portion of a disbursement of benefits
from the System to a Distributee that is not includable in gross
income under Section 72 of the Internal Revenue Code of 1986, as
amended, the guidance under I.R.S. Notice 2014-54 shall be followed.
Added by Laws 1999, c. 257, § 25, eff. July 1, 1999. Amended by
Laws 2000, c. 287, § 16, eff. July 1, 2000; Laws 2003, c. 406, § 5,
eff. July 1, 2003; Laws 2007, c. 152, § 8, eff. July 1, 2007; Laws
2008, c. 177, § 9, eff. July 1, 2008; Laws 2010, c. 437, § 9, emerg.
eff. June 9, 2010; Laws 2011, c. 141, § 2, emerg. eff. April 29,
2011; Laws 2012, c. 52, § 2, emerg. eff. April 16, 2012; Laws 2015,
c. 171, § 3, emerg. eff. April 27, 2015; Laws 2017, c. 113, § 1,
emerg. eff. April 26, 2017.‹ Prev All Oklahoma sections Next ›
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