[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.402(a)(5)-1T]

[Page 383-384]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.402(a)(5)-1T  Rollovers of partial distributions from qualified 
trusts and annuities. (Temporary)

    Q-1: Can an employee or the surviving spouse of a deceased employee 
roll over to an individual retirement account or annuity, described in 
section 408 (a) or (b), the taxable portion of a partial distribution 
from a qualifiedtrust described in section 401(a), a qualified plan 
described in section 403(a), or a tax-sheltered annuity contract under 
section 403(b)?
    A-1: Yes. For distributions made after July 18, 1984, the taxable 
portion of a partial distribution may be rolled over within 60 days of 
the distribution to an individual retirement account or annuity.
    Q-2: Are there special requirements applicable to rollovers of 
partial distributions?
    A-2: Yes. Section 402(a)(5)(D)(i) specifies that no part of a 
partial distribution may be rolled over unless the distribution is equal 
to at least 50 percent of the balance to the credit of the employee in 
the contract or plan immediately before the distribution, and the 
distribution is not one of a series of periodic payments. For purposes 
of this section, the balance to the credit of an employee does not 
include any accumulated deductible employee contributions (within the 
meaning of section 72(o)). In addition, in calculating the balance to 
the credit for purposes of the 50 percent test, qualified plans are not 
to be aggregated with other qualified plans and tax-sheltered annuity 
contracts are not to be aggregated with other tax-sheltered annuity 
contracts. Also, in applying the 50 percent test to a surviving spouse, 
the balance to the credit is the maximum amount the spouse is entitled 
to receive under the

[[Page 384]]

plan or contract, rather than the total balance to the credit of the 
employee. The rollover of a partial distribution may result in adverse 
tax consequences; see section 402(a)(5)(D) (iii) and (iv).
    Q-3: Are there any other requirements applicable to rollovers of 
partial distribution?
    A-3: Yes. Section 402(a)(5)(D)(i)(III) requires the employee to 
elect, in conformance with Treasury regulations, to treat a contribution 
of a partial distribution to an IRA as a rollover contribution. An 
election is made by designating, in writing, to the trustee or issuer of 
the IRA at the time of the contribution that the contribution is to be 
treated as a rollover contribution. This requirement of a written 
designation to the trustee or issuer of the IRA is effective for 
contributions paid to the trustee or issuer of the IRA after March 20, 
1986. For contributions paid to the trustee or issuer before March 21, 
1986, an election is made by computing the individual's income tax 
liability on the income tax return for the taxable year in which the 
distribution occurs in a manner consistent with not including the 
distribution (or portion thereof) in gross income. Both such elections 
are irrevocable, except that an election made on an income tax return 
filed before March 21, 1986 is revocable.
    Q-4: Does the election requirement apply to rollovers of qualified 
total distributions or rollover contributions described in section 
402(a) (5) or (7), 403(a)(4), 403(b)(8), 405(d)(3), or 408(d)(3) to 
individual retirement accounts and annuities (IRAs)?
    A-4: Yes. No amounts may be treated as a rollover contribution to an 
IRA under section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), 405(d)(3) 
(as amended by section 491(c) of the TRA of 1984), or 408(d)(3) unless 
the requirements described in Q & A-3 of this section are satisfied. 
Thus, once any portion of a total distribution is irrevocably designated 
as a rollover contribution, such distribution is not taxable under 
section 402 or 403 and, therefore, is not eligible for the special 
capital gains and separate tax treatment under section 402 (a) and (e). 
Election requirements for rollover contributions to IRAs described in 
this Q &A-4 are subject to the same effective date rules set forth in Q 
&A-3.

[T.D. 8073, 51 FR 4320, Feb. 4, 1986]