(1) A participant may elect to have any portion of an eligible rollover distribution made as a direct rollover.
(2) An "eligible rollover distribution" means any allowed distribution of all or any portion of the accumulated contributions of a member to an eligible retirement plan to the credit of a participant, except that an eligible rollover distribution does not include:
(a) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or the life expectancy) of the participant or the joint lives (or joint life expectancies) of the participant and the participant's designated beneficiary, or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is required under IRC 401(a)(9);
(c) the portion of any distribution that is not includible in gross income; and
(d) any other distribution that is reasonably expected to total less than $200 during the year.
(3) Effective January 1, 2002, a portion of a distribution will not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income; however, such portion may be transferred only:
(a) to an individual retirement account or annuity described in IRC section 408(a) or (b);
(b) to a qualified defined contribution plan described in IRC section 401(a);
(c) on or after January 1, 2007, to a qualified defined benefit plan described in IRC section 401(a); or
(d) on or after January 1, 2007, to an annuity contract described in IRC section 403(b) that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible.
(4) Effective January 1, 2002, the definition of eligible rollover distribution also includes a distribution to a surviving spouse, or to a spouse or former spouse who is an alternate payee under a FLO, as defined in IRC section 414(p).
(5) A participant who is a nonspouse beneficiary may rollover a distribution only to an individual retirement account or individual retirement annuity established for the purpose of receiving the distribution. The account or annuity will be treated as an inherited individual retirement account or annuity.