Skip to Content

Eligible rollover distribution (ERD)

Last Updated May 21, 2009

Definition

A distribution that is eligible to be rolled over to an eligible retirement plan. Eligible rollover distributions include a participant’s balance in a qualified plan, 403(b) or 457(b) plan, except for certain amounts that include the following:

Definition

A distribution that is eligible to be rolled over to an eligible retirement plan. Eligible rollover distributions include a participant’s balance in a qualified plan, 403(b) or 457(b) plan, except for certain amounts that include the following:

 

  • Any of a series of substantially equal distributions paid at least once a year over:
    • The participant’s  lifetime or life expectancy,
    • The joint lives or life expectancies of the participant and his/her beneficiary, or
    • A period of 10 years or more,
  • A required minimum distribution
  • Hardship distributions,
  • Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or of excess annual additions and any allocable gains 
  • A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant's accrued benefits are reduced (offset) to repay the loan
  • Dividends on employer securities, and
  • The cost of life insurance coverage.

 

Referring Cite

IRC § 402(c)(2), IRC § 402(c)(4); Treas. Reg. §1.402(c)-2, Q&A-4

 

Additional Helpful Information

  • Eligible rollover amounts that are processed as a direct rollover are not subject to withholding tax
  • Eligible rollover amounts that are not processed as a direct rollover, must generally be rolled over within 60-days: that is assuming the participant wants to rollover the amount. But see
  • Eligible rollover amounts that are not processed as a direct rollover are generally subject to a federal withholding tax of 20%. State tax withholding may also apply, depending on the State’s tax-withholding requirements