Regulations provide that where a plan accepts a rollover
contribution it will be treated for purposes of the qualification rules as a
valid rollover contribution as long as the following two conditions are
satisfied. First, the plan administrator reasonably concludes that the
contribution is a valid rollover contribution. Second, if the plan
administrator of the receiving plan later determines that the contribution was
an invalid rollover contribution, the amount of invalid contribution plus
earnings must be distributed to the employee. Treas. Reg. § 1.401(a)(31)-1, Q
& A 14(a).
For purposes
of the first condition that the plan administrator must reasonably conclude
that the contribution is a valid rollover contribution, the regulations note
that while evidence of a favorable IRS determination letter is useful in
concluding that the contribution is a valid rollover contribution, a
determination letter is not necessary to conclude
that the contribution is a valid rollover contribution. Treas. Reg. § 1.401(a)(31)-1, Q & A 14(a).
The
regulations give various examples where the plan administrator of the receiving
plan may conclude that the contribution as a valid rollover contribution. For example, a letter from plan administrator
of distributing plan that it has a favorable IRS determination letter can be
relied upon to conclude there is a valid rollover contribution. Treas. Reg. § 1.401(a)(31)-1, Q & A 14(c),
Ex. 1. Alternatively, a letter from the
plan administrator of the distributing plan representing that the plan is
qualified and that the plan administrator is not aware of anything that would
result in disqualification could also be relied upon. Treas. Reg. § 1.401(a)(31)-1, Q & A 14(c),
Ex. 2.
According to
a 2014 revenue ruling, a plan administrator of the receiving plan may rely on
the fact that Line 8a of Form 5500 for distributing plan, available on www.efast.dol.gov,
(or Line 9 of Form 5500-SF) does not include Code 3c for a nonqualified plan
for reliance that the contribution is a valid rollover contribution. Rev. Rul. 2014-9, Situation 1.
Similarly
with regard to a rollover from a traditional IRA a check from the trustee
payable to the receiving plan that indicates on the pay stub that it is an IRA
of the employee (and the employee certifies that there are no after-tax amounts
and the employee is not age 70-1/2), the plan administrator may conclude that
the contribution from the IRA is a valid rollover contribution. Rev. Rul. 2014-9, Situation 2.
