Sec. 22-266. - Rollover of lump sum distributions.
(a) For purposes of this section, the following terms have the meanings assigned to them in Section 401(a)(31) of the Internal Revenue Code and, to the extent not inconsistent therewith, shall have the following meanings:
Eligible retirement plan means a defined contribution plan which is either an individual retirement account described in Section 408(a) of the Internal Revenue Code, an individual retirement annuity described in Section 408(b) of the Internal Revenue Code other than an endowment contract, an annuity plan described in Section 403(a) of the Internal Revenue Code or a qualified trust described in Section 401(a) of the Internal Revenue Code that accepts the prospective recipient's eligible rollover distribution. For distributions made before January 1, 2002, for an eligible rollover distribution payable to a participant's surviving spouse, an eligible retirement plan means only an individual retirement account or individual retirement annuity. Effective for distributions made after December 31, 2001, an eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Internal Revenue Code and an eligible plan under Section 457(b) of the Internal Revenue Code 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 account separately for amounts transferred into such plan from this plan. Effective for distributions made after December 31, 2001, the definition of eligible retirement plan applicable to a participant shall also apply for a distribution to a participant's surviving spouse and to a participant's spouse or former spouse who is the alternate payee under a domestic relations order accepted by the system.
Eligible rollover distribution means any distribution other than:
(1) A distribution which is one of a series of substantially equal periodic payments, not less frequently than annually, made either for the life or life expectancy of the recipient or the joint lives or joint life expectancies of the recipient and the recipient's beneficiary who is an individual or for a specified period of ten or more years; or
(2) A distribution to the extent it is required under the minimum distribution requirement of Section 401(a)(9) of the Internal Revenue Code.
(b) Effective January 1, 1993, notwithstanding anything to the contrary in this article, but subject to any de minimis or other exceptions or limitations provided for under Section 401(a)(31) of the Internal Revenue Code, any prospective recipient, whether a member, a surviving spouse, a current or former spouse who is an alternate payee under a domestic relations order accepted by the system or any other person eligible to make a rollover, of a distribution from the City plan which constitutes an eligible rollover distribution, to the extent otherwise includible in the recipient' s gross income, may direct the Board to pay the distribution directly to an eligible retirement plan.
(c) Any such direction shall be filed with the Board in such form and at such time as the Board may require and shall adequately specify the eligible retirement plan to which the payment shall be made. The Board shall make payment as directed only if the proposed transferee plan will accept the payment. Any such plan-to-plan transfer shall be considered a distribution option under this plan and shall be subject to all the usual distribution rules of the system, including, but not limited to, the requirement of an advance explanation of the option. The Board is authorized in its discretion, on a uniform and nondiscriminatory basis, to apply any discretionary de minimis or other discretionary exceptions or limitations provided for under Section 401(a)(31) of the Internal Revenue Code in effecting or declining to effect plan-to-plan transfers under this section. Within a reasonable time (generally not more than 90 nor less than 30 days) before the benefit payment date of a prospective recipient of an eligible rollover distribution from the plan, the Board shall provide the prospective recipient with a written explanation of the rollover and tax rules required by Section 402(f) of the Internal Revenue Code.
(d) In the event of a mandatory distribution greater than $1,000.00 in accordance with the provisions of Section 22-265, if the member does not elect to have such distribution paid directly to an eligible retirement plan specified by the member in a direct rollover or to receive the distribution directly in accordance with this section, then the Board will pay the distribution in a direct rollover to an individual retirement plan designated by the plan administrator. The Board will select the individual retirement plan in accordance with the safe harbor provisions established under Code of Virginia, § 51.1-803(c), and such provisions shall be interpreted and administered in accordance therewith. This mandatory rollover requirement does not apply to a lump sum payment made to a surviving spouse or former spouse who is an alternate payee under a domestic relations order accepted by the system prior to June 10, 2002.
(Code 1993, § 23.1-57; Code 2004, § 78-284; Code 2015, § 22-266; Code 2020, § 22-266; Ord. No. 2006-22-49, § 1, 2-27-2006)
