The IRC has been amended several times to simplify the rules relating to eligible rollover distributions to tax-qualified retirement plans. However, the related regulations governing eligible rollover distributions have not been updated to reflect all of these changes.

IRS Revenue Ruling 2014-9 provides two hypothetical examples that illustrate how plan administrators of qualified retirement plans may:

IRC Section 401(a)(31) generally provides that a qualified plan loses its tax-qualified status unless it provides that a rollover distribution from an eligible retirement plan to the plan is made in the form of a direct trust-to-trust transfer. Treasury Regulation Section 1.401(a)(31)-1 permits a trustee of a plan to accomplish a direct rollover by providing a distributee with a check made payable to the trustee of another eligible retirement plan for the benefit of the distributee and instructing the distributee to deliver the check to the eligible retirement plan.

This regulation also provides a number of examples illustrating situations in which the administrator of a receiving plan of one of these checks may reasonably conclude that the distributing plan is a qualified plan and that the potential rollover contribution is a valid rollover contribution. Situation 1 of Revenue Ruling 2014-9 provides an additional set of facts under which a plan administrator of a qualified retirement plan may reasonably assume that a rollover distribution in this form is a valid rollover contribution.

Under the facts presented in Situation 1, a plan administrator of a qualified plan evaluating the reasonableness of a check in 2014 from an eligible retirement plan (for the benefit of a distributee) may safely assume that the distributing plan is intended to be a qualified plan if:

The IRS notes that if the distribution occurred during or after the year in which the distributee had attained age 70 1/2, it would be reasonable to assume that the distributing plan made the required minimum distribution (RMD) for the year before making the rollover (see Practice Note, Required Minimum Distributions from Retirement Plans).

IRC Section 402(c) provides that individual retirement accounts (IRAs) qualify as eligible retirement plans from which rollover distributions may be accepted by qualified plans. (Previously, IRC Section 402(c) provided that only conduit IRAs satisfied this requirement.) IRC Section 408(d) limits this provision by providing that:

Treasury Regulation 1.402(c)-2 provides a list of distributions that are not eligible rollover distributions. However, this regulation was not amended after IRC Section 402(c) was amended to permit IRAs other than conduit IRAs to qualify as eligible retirement plans from which rollover distributions may be accepted by qualified plans. Situation 2 of Revenue Ruling 2014-9 provides an additional set of facts under which a plan administrator of a qualified retirement plan may reasonably assume that a rollover distribution from a traditional, non-inherited IRA is a valid rollover contribution.

Under the facts presented in Situation 2, a plan administrator of a qualified plan evaluating the reasonableness of a check from an IRA (for the benefit of the IRA distributee) may safely assume that the source of the funds is a traditional, non-inherited IRA if:

The IRS notes that if the distributee had attained age 70 1/2 or older by the end of the year in which the check was issued, the plan administrator of the receiving plan could not reasonably conclude that the potential rollover contribution was a valid rollover contribution without additional information (see Practice Note, Required Minimum Distributions from Retirement Plans).

Revenue Ruling 2014-9 allows plan administrators of qualified retirement plans to safely accept rollover contributions in two common situations where it was previously unclear whether rollovers qualified as eligible rollover distributions under regulatory provisions that have not been updated to reflect changes to the IRC. In practice, this may increase portability of retirement plan assets, particularly for plans that only accepted IRA rollovers from conduit IRAs.