4001 / Must a participant receiving an eligible rollover distribution have the option of making a direct rollover to another qualified plan?
Yes.
A qualified plan, a Section 403(b) tax sheltered annuity, and an eligible Section 457 governmental plan must provide a participant receiving an eligible rollover distribution the option to have the distribution transferred in the form of a direct rollover to another eligible retirement plan.1 This direct rollover option generally must be provided to any participant receiving a distribution.2
A direct rollover is defined as an eligible rollover distribution ( Q 3998) that is paid directly to an eligible retirement plan ( Q 4000) for the benefit of the distributee. A direct rollover may be accomplished by any reasonable means of direct payment, including the use of a wire transfer or a check that is negotiable only by the trustee of the eligible retirement plan.3 Giving the check to the distributee for delivery to the eligible retirement plan is considered reasonable provided that the check is made payable to the trustee of the eligible retirement plan for the benefit of the distributee.4 Certain amounts may be rolled over only in the form of a trustee-to-trustee transfer.5 Plans are not required to accept rollovers, direct or otherwise.