When & how rollover rules
Hi,
Does anyone know if there is regulation of when and how a retirement plan provider must perform a requested rollover? For example, a defined benefit plan rolls over client assets two weeks after termination of employment, but does not rollover entire amount. Then every two weeks the retirement plan provider rolls over another specific amount to the terminated employee. This continues until all of the funds are rolled over. The entire process could take as long as two months. Is this permitted?
Thank you
Permalink Submitted by Alan Spross on Thu, 2012-10-18 18:09
I don’t know if there is a specific time deadline. Sec 401(a)(31) indicates that the direct rollover must be done within a reasonable length of time and 60 days appears to be within that time frame. Did client receive a 402f Notice or explanation of why the rollouts?
Defined benefit plans are required to limit lump sum distributions in some cases where they are underfunded, but this does not sound like such a situation.
Permalink Submitted by Mike Smith on Mon, 2012-10-29 06:10
regs suggest the departing custodian trustee has 30 days to perform transaction if paperwork is in good order.
Permalink Submitted by Anonymous (not verified) on Sat, 2012-11-10 01:53
Hi Msmith,
Thanks for responding. Can you provide the regs section?
Permalink Submitted by Anonymous (not verified) on Sat, 2012-11-10 01:55
alan-oniras,
Thanks for responding. Client did a notice explaining basic rollover issues (taxes, etc.) but nothing on the form about the rollovers being performed over two week periods.