| (a) Notwithstanding any provision of the retirement plan to the contrary that would otherwise limit a distributee's election under this section, an eligible distributee of an eligible rollover distribution from the Teacher Retirement System of Texas (TRS) may elect, at the time and in the manner prescribed by TRS, to have any portion of the distribution paid directly to an eligible retirement plan or a Roth IRA specified by the distributee in a direct rollover, to the extent permitted by Internal Revenue Code of 1986 (IRC), as amended, and guidance issued thereunder. (b) To the extent permitted under the IRC, as amended, an individual beneficiary of a TRS participant, other than a surviving spouse or alternate payee, who is an eligible distributee of an eligible rollover distribution from TRS may elect, at the time and in the manner prescribed by TRS, to have any portion of the distribution paid directly to a traditional or Roth individual retirement account (IRA) or individual retirement annuity established for the purpose of receiving the distribution, specified by the distributee in a direct rollover, that shall be treated as an inherited IRA or annuity. A trust that is a beneficiary may be treated as a beneficiary eligible to make such an election only to the extent permitted under the IRC, as amended. (c) An eligible rollover distribution may generally only be transferred in a direct rollover to an "eligible retirement plan." An "eligible retirement plan" must use a trust established within the United States of America ("U.S.") and maintained as a U.S. domestic trust, a custodial account that satisfies IRC Section 401(f)(2) (generally requiring a U.S. entity), or an annuity contract issued by an insurance company licensed to do business in the U.S. (1) Notwithstanding the requirement of this subsection, a direct rollover may be made to a foreign trust that is part of a stock bonus, pension, or profit-sharing plan established outside the U.S. if the receiving foreign trust would qualify for exemption from tax under IRC §401(a) and §501(a), except for the fact that it is a trust created or organized outside the U.S. To claim this exemption, in addition to any other information required by TRS, the distributee must furnish a written statement by an authorized official of the foreign trust stating that the foreign trust is a trust described under IRC §402(d). TRS will not make a transfer to the foreign trust without this statement. (2) For a rollover distribution to an IRA, the IRA must be a trust created or organized in the U.S. and must be maintained at all times as a domestic trust in the U.S., the trustee of which must be a U.S. bank as defined in IRC §408(n) and the regulations thereunder, or who is listed as an approved non-bank trustee or custodian under Announcement 2007-47 or any successor publication of the IRS thereto. (3) For a rollover distribution to a 403(b) custodial account or a 401(a) or 457(b) plan, the assets of which are held in a custodial account, the trustee must be a U.S. bank as defined in IRC §408(n) and the regulations thereunder, or a non-bank trustee or custodian who is listed as an approved non-bank trustee or custodian under Announcement 2007-47 or any successor publication of the IRS thereto. (d) TRS shall develop procedures to implement this section in accordance with the IRC, §401(a)(31), as amended, and related regulations. Terms used in this section, including eligible rollover distribution, eligible retirement plan, distributee, and direct rollover, shall have the meaning assigned in the IRC, as amended, and guidance issued thereunder. |
| Source Note: The provisions of this §35.2 adopted to be effective March 12, 2003, 28 TexReg 211; amended to be effective May 22, 2008, 33 TexReg 4007; amended to be effective April 1, 2011, 36 TexReg 2000 |
