IRS Provides Guidance On Rollover Distributions

January 30, 2004 ( - Retirement plans that separately account for rollover contributions do not have to treat distributions of those amounts to the restrictions on permissible timing.

The Internal Revenue Service (IRS) has outlined in Revenue Ruling 2004-12 the process by which a plan sponsor must account for distribution requests from a retirement plan that holds separately rollover assets and contributions.   Overall, the service ruled that the plan sponsor may “permit the distribution of amounts attributable to rollover contributions at any time pursuant to an individual’s request.”

As an example, the IRS provided the following scenario.   If the receiving plan is a money purchase pension plan and the plan separately accounts for amounts attributable to rollover contributions, a plan provision permitting the in-service distribution of those amounts will not cause the plan to fail to satisfy the requirements of the applicable tax code.

However, a distribution of amounts attributable to a rollover contribution is subject to the appropriate survivor annuity requirements, the applicable minimum distribution requirements, and the additional income tax on premature distributions.

A copy of Revenue Ruling 2004-12 is available at