Can a lump sum distribution or monthly payments from a Defined Benefit Plan be transferred into an IRA tax deferred?

Submitted by William Czerkies on Tue, 2023-03-07 17:10

Hello,
I have a client who turned 60 and has 30 years of service with a defined benefit plan with the Tennessee Consolidated Retirement System (TCRS). They either need to start taking payments or can opt for a lump sum payout.
1. Can the monthly payments be rolled over or transferred to an IRA tax-deferred?
2. Can the lump sum payment be rolled over or transferred to an IRA tax-deferred?
My guess is “no” on both accounts, but I don’t know what I don’t know.
Thank you, kindly,
Billy C



Submitted by Alan - IRA critic on Tue, 2023-03-07 17:44

  1. No, because they are being paid over the LE or joint LE with beneficiary. These distributions are not eligible rollover distributions. 
  2. A lump sum election CAN be rolled over to an IRA, best done by direct rollover to avoid mandatory 20% withholding.

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