Compliance April 1, 2010
60-day Rollover Requirement Doesn't Apply to Check Made to New Plan
April 1, 2010 (PLANSPONSOR.com) – The Internal Revenue Service has ruled that the 60-day rollover requirement is not applicable to a plan distribution check made payable to a second plan's sponsor.
Reported by PLANSPONSOR staff
The IRS explained that the taxpayer received a plan distribution that was a direct rollover, as that term is defined in Code Sec. 401(a)(31), CCH reported. Although the check was mailed to her, it was made payable to the second company, so she lacked control over the check and could not have cashed it, the agency said, according to the news report.
The IRS noted that a Form 1099-R that she received concerning the distribution supported this conclusion by showing in Box 7 Distribution Code “G,” indicating a “Direct Rollover” to a qualified plan, with no withholding for federal income tax.
For these reasons, the IRS found that the taxpayer received a distribution that was already a direct rollover not subject to the 60-day rollover requirement, and she could deposit the check into the second employer’s plan even though 60 days had passed since she received it.