Content area
Abstract
On December 28, 2004, IRS provided guidance in IRS Notice 2005-51 on complying with the automatic rollover rules. In general, the automatic rollover rules apply to mandatory distributions made on or after March 28, 2005. The Notice, however, provides delayed effective dates for mandatory distributions from governmental plans described in Section 414(d) (including plans described in Sections 403(b) and 457(b) that qualify as governmental plans) and certain non-electing church plans described in Section 414(e). If a participant is eligible to receive a mandatory distribution, the Notice requires a plan administrator to notify the participant in writing that absent an affirmative election by the participant, the distribution will be paid to an individual retirement plan. A plan sponsor may amend its plan to either: 1. eliminate automatic distributions of small account balances or 2. to limit mandatory distributions to amounts less than $1,000. If a plan includes IRAs under Section 408(c) or a deemed IRA under Section 408(q), then a mandatory distribution may be made to a deemed IRA that is part of the plan making the distribution.