IRA

Recommending Eligible Rollover Distributions as a Fiduciary

March 30, 2017

When acting in your client's best interest and following firm policies, procedures, and guidelines, be sure that any recommendation you make follows the rollover rules, too.

The final DOL Fiduciary Rule, issued April 6, 2016, added another layer to the already existing, complex collection of qualified plan and IRA rollover rules.

A rollover occurs when a taxpayer takes a distribution from one qualified plan or IRA and, within 60 days, deposits it into another qualified plan or IRA. Distributions that can be rolled, either directly or indirectly, are eligible rollover distributions.
However, not every distribution is eligible to be rolled.
 

Eligible Rollover Distribution Exceptions

Notable exceptions are:

  • A distribution that is one of a series of substantially equal periodic payments (IRC §72(t)) made not less frequently than annually and made during one of the following time frames:

1.     The life of the participant (or the joint lives of the participant and the participant’s designated beneficiary).

2.     The life expectancy of the participant (or the participant and the participant’s designated beneficiary).

3.     A specified period of 10 years or more.

  • A required minimum distribution.
  • A hardship distribution.
  • A distribution of excess contributions and related earnings.
  • A loan that is treated as a distribution.
  • A distribution of dividends paid on employer securities.
  • The cost of accident, health, or life insurance coverage.
  • A withdrawal when opting out of automatic contribution arrangements.
     

Eligible Rollover Distribution Rules

There are other rules that you'll want to be sure you remember and take into account when making rollover recommendations to clients, too. To name a few–withholding, rolling nontaxable amounts, portability, and the 60 day rollover limit.

You're not alone with all of this. The Pacific Life Retirement Strategies Group can help you with distribution and other rollover-related rules. If you have any additional questions, please feel free to contact us at (800)722-2333, ext. 3939, or e-mail us at RSG@PacificLife.com.


Attachments/Links:

 

IRS Publication 575 (PDF)

IRS Topic 413 - Rollovers from Retirement Plans

IRS Announces New Relief for Missed 60-Day Rollovers

Picture of Steve Chmelka

Steve is a Senior Retirement Strategies Consultant with the Retirement Solutions Division at Pacific Life. He brings more than 25 years of industry experience in financial planning and wealth management, including detailed knowledge of both employer-sponsored retirement plans and retirement-planning strategies.

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