97B.53B  Rollovers of members’ accounts.
  1.  As used in this section, unless the context otherwise requires, and to the extent permitted by the internal revenue service:
  a.  “Direct rollover” means a payment by the system to the eligible retirement plan specified by an eligible person.
  b.  “Eligible person” means any of the following:
  (1)  The member.
  (2)  The member’s surviving spouse.
  (3)  The member’s spouse or former spouse as an alternate payee under a qualified domestic relations order.
  (4)  Effective January 1, 2007, the member’s nonspouse beneficiaries who are designated beneficiaries as defined by section 401(a)(9)(E) of the federal Internal Revenue Code, as authorized under section 829 of the federal Pension Protection Act of 2006.
  c.  “Eligible retirement plan” means, for an eligible person, any of the following retirement plans that can accept an eligible rollover distribution from that eligible person:
  (1)  An individual retirement account in accordance with section 408(a) of the federal Internal Revenue Code.
  (2)  An individual retirement annuity in accordance with section 408(b) of the federal Internal Revenue Code.
  (3)  An annuity plan in accordance with section 403(a) of the federal Internal Revenue Code, or a qualified trust in accordance with section 401(a) of the federal Internal Revenue Code, that accepts an eligible rollover distribution from a member.
  (4)  Effective January 1, 2002, an annuity contract described in section 403(b) of the federal Internal Revenue Code, and an eligible plan under section 457(b) of the federal Internal Revenue Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state that chooses to separately account for amounts transferred into such eligible retirement plan from the system.
  (5)  Effective January 1, 2008, a Roth individual retirement account or a Roth individual retirement annuity established under section 408A of the Internal Revenue Code.
  d.  (1)  “Eligible rollover distribution” includes any of the following:
  (a)  All or any portion of a member’s account and supplemental account.
  (b)  Effective January 1, 2002, after-tax employee contributions, if the plan to which such amounts are to be transferred is an individual retirement account described in federal Internal Revenue Code section 408(a) or 408(b), or is a qualified defined contribution plan described in federal Internal Revenue Code section 401(a) or 403(a), and such plan agrees to separately account for the after-tax amount so transferred.
  (c)  Effective January 1, 2007, after-tax employee contributions to a qualified defined benefit plan described in federal Internal Revenue Code section 401(a) or 403(a), or a tax-sheltered annuity plan described in federal Internal Revenue Code section 403(b), and such plan agrees to separately account for the after-tax amount so transferred.
  (2)  An eligible rollover distribution does not include any of the following:
  (a)  A distribution that is one of a series of substantially equal periodic payments, which occur annually or more frequently, made for the life or life expectancy of the distributee or the joint lives or joint life expectancies of the distributee and the distributee’s designated beneficiary, or made for a specified period of ten years or more.
  (b)  A distribution to the extent that the distribution is required pursuant to section 401(a)(9) of the federal Internal Revenue Code.
  (c)  Prior to January 1, 2002, the portion of any distribution that is not includible in the gross income of the distributee, determined without regard to the exclusion for net unrealized appreciation with respect to employer securities.
  2.  An eligible person may elect, at the time and in the manner prescribed in rules adopted by the system and in rules of the receiving retirement plan, to have the system pay all or a portion of an eligible rollover distribution directly to an eligible retirement plan in a direct rollover. However, effective January 1, 2007, if the eligible person is a nonspouse beneficiary as described in subsection 1, paragraph “b”, subparagraph (4), the nonspouse beneficiary may only have a direct rollover of the distribution to an individual retirement account or annuity as described in subsection 1, paragraph “c”, subparagraphs (1), (2), and (5), established for the purpose of receiving the distribution on behalf of the nonspouse beneficiary, and such individual retirement account or annuity will be treated as an inherited individual retirement account or annuity pursuant to section 829 of the federal Pension Protection Act of 2006.
94 Acts, ch 1183, §48
; 
96 Acts, ch 1187, §50
; 
2000 Acts, ch 1077, §65
; 
2001 Acts, ch 68, §21, 24
; 
2002 Acts, ch 1135, §30, 38
; 
2003 Acts, ch 145, §286
; 
2004 Acts, ch 1103, §48, 61
; 
2008 Acts, ch 1032, §201
; 
2008 Acts, ch 1171, §39, 48, 49