2023 Texas Statutes › Government Code › Title 8 - Public Retirement Systems › Subtitle C - Teacher Retirement System of Texas › Chapter 825 - Administration › Subchapter F. Miscellaneous Administrative Procedures › Section 825.509. Direct Rollovers

Sec. 825.509.  DIRECT ROLLOVERS.  (a)  This section applies to distributions made on or after January 1, 1993.  Notwithstanding any law governing the retirement system that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the executive director or the executive director's designee, to have any portion of an eligible rollover distribution from the retirement system paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(b)  An eligible rollover distribution under this section is any distribution of all or a portion of the balance to the credit of the distributee, other than:
(1)  a distribution that is one of a series of substantially equal periodic payments made not less frequently than annually for:
(A)  the life or life expectancy of the distributee;
(B)  the joint lives or joint life expectancies of the distributee and the distributee's designated beneficiary;  or
(C)  a specified period of 10 years or more;
(2)  a distribution to the extent the distribution is required under Section 401(a)(9), Internal Revenue Code of 1986;  or
(3)  the portion of a distribution that is not includable in gross income for federal income tax purposes.
(b-1)  Notwithstanding Subsection (b)(3), with respect to a distribution made on or after January 1, 2002, an otherwise eligible portion of a rollover distribution that consists of after-tax employee contributions not includable in gross income is an eligible rollover distribution for purposes of this section.  The eligible portion may be transferred only:
(1)  to an individual retirement account or annuity described by Section 408(a) or (b), Internal Revenue Code of 1986;
(2)  to a qualified plan described by Section 403(a), Internal Revenue Code of 1986;
(3)  for distributions occurring on or after January 1, 2007, to a qualified plan described by Section 401(a), Internal Revenue Code of 1986, if the plan agrees to separately account for:
(A)  the amounts transferred and the earnings on the amounts transferred; and
(B)  the portion of the distribution that is includable in gross income and the portion of the distribution that is not includable in gross income; or
(4)  to an annuity contract described by Section 403(b), Internal Revenue Code of 1986, that agrees to separately account for amounts transferred and earnings on amounts transferred, including for the portion of the distribution that is includable in gross income and the portion of the distribution that is not includable in gross income.
(c)  An eligible retirement plan under this section includes:
(1)  an individual retirement account described by Section 408(a), Internal Revenue Code of 1986;
(2)  an individual retirement annuity described by Section 408(b), Internal Revenue Code of 1986;
(3)  an annuity plan described by Section 403(a), Internal Revenue Code of 1986;
(4)  a qualified trust described by Section 401(a), Internal Revenue Code of 1986, that accepts the distributee's eligible rollover distribution;
(5)  with respect to a distribution made on or after January 1, 2002, a plan eligible under Section 457(b), Internal Revenue Code of 1986, that is maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state that agrees to separately account for amounts transferred into the plan from the retirement system;
(6)  with respect to a distribution made on or after January 1, 2002, an annuity contract described by Section 403(b), Internal Revenue Code of 1986; or
(7)  with respect to a distribution made on or after January 1, 2008, a Roth IRA described by Section 408A, Internal Revenue Code of 1986.
(d)  In this section:
(1)  "Direct rollover" means a payment by the retirement system to the eligible retirement plan specified by a distributee.
(2)  "Distributee" means a person who receives an eligible rollover distribution from the retirement system and includes an employee or former employee and, regarding the interest of an employee or former employee, the person's surviving spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined by Section 414(p), Internal Revenue Code of 1986.  With respect to a distribution made on or after January 1, 2007, a distributee includes a beneficiary who:
(A)  is a designated beneficiary, as defined by Section 401(a)(9)(E), Internal Revenue Code of 1986, of an employee or former employee; and
(B)  is not the spouse, surviving spouse, or alternate payee of an employee or former employee.
(e)  A direct trustee-to-trustee transfer on behalf of a distributee beneficiary who is not a spouse is an eligible rollover distribution.  A distributee beneficiary who is not a spouse may roll over the distribution only to an individual retirement account or individual retirement annuity that:
(1)  is established for the purpose of receiving the distribution; and
(2)  is considered an inherited account or annuity to which Section 401(a)(9)(B), Internal Revenue Code of 1986, applies, except for Section 401(a)(9)(B)(iv).
(f)  To the extent provided by federal law, a trust maintained for the benefit of one or more designated beneficiaries shall be treated in the same manner as a trust maintained for a designated beneficiary.
Added by Acts 1993, 73rd Leg., ch. 812, Sec. 31, eff. Sept. 1, 1993.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 1171 (H.B. 3347), Sec. 4, eff. September 1, 2009.
Acts 2017, 85th Leg., R.S., Ch. 931 (S.B. 1664), Sec. 8, eff. September 1, 2017.