Automatic Rollover definition

Automatic Rollover means a distribution in cash made by the Plan in a direct rollover to an individual retirement plan designated by the Sponsor.

Split View

AI-Powered Contracts

Draft, Review & Redline at the Speed of AI

Get StartedSchedule a Demo

Automatic Rollover generally means that, if an employee's employment with a plan sponsor terminates with a vested benefit between $1,000 and $5,000, the balance is automatically rolled over tax-free to an IRA established in the employee’s name unless the employee directs otherwise or the plan sponsor chooses to retain the benefit in the plan (Internal Revenue Code sections 401(a)(31), 402(c).) The IRAs generally invest the benefits in principal preservation funds such as money market funds because DOL regulations limit safe harbor treatment to such investments, but the Retirement Savings Lost and Found bill referred to above would allow investment in target date funds with a view to reducing the likelihood that the IRA balances will shrink as fees exceed returns. “Automatic portability” generally refers to a newer procedure whereby, in these circumstances, if a departing employee takes a new job and participates in the new employer’s plan but does not direct a rollover, the former employer’s plan and new employer’s plan (or more likely their recordkeepers on their behalf) can provide an intermediary entity the information needed to complete an automatic rollover to the new plan unless the participant directs otherwise. The rollover can automatically go directly to the new plan or, if the departing employee is not yet a participant in a new employer plan, it can go to an IRA and later automatically roll from the IRA to the new plan. See DOL PTE 2019- 02, 84 Fed. Reg. 37337 (July 31, 2019). Norway has recently announced that it will require auto-portability on somewhat similar terms (Nordahl 2020).

Examples of Automatic Rollover in a sentence

• A Mandatory Distribution to a Participant before attaining the later of age 62 or Normal Retirement Age is subject to Automatic Rollover under Section 6.08(D) (Choose one of a.

• A Participant who terminates employment with a vested Account Balance of $5,000 or less will receive an Involuntary Cash-Out Distribution, subject to the Automatic Rollover provisions under Section 8.06 of the Plan.

• See Section 6.08(D) regarding potential Automatic Rollover of Mandatory Distributions.

• A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan the distributee specifies in his/her Direct Rollover election or in the case of an Automatic Rollover, to the Individual Retirement Plan that the Plan Administrator designates.

• The notice will explain the Automatic Rollover under Section 6.08(D) as applicable in the case of the Participant's failure to respond timely to the rollover notice.

• With respect to Automatic Rollover IRAs, we may pay an expense reimbursement, one time or recurring, to third party administrators or record keepers providing services to your previous employer’s retirement plan.

• If this subsection (3) is checked, the Automatic Rollover provisions apply to all Involuntary Cash-Out Distributions (including those below $1,000).

• The Automatic Rollover rules described in Section 7.05 of the Plan do not apply to any Involuntary Cash-Out Distribution below $1,000, unless elected otherwise under this subsection (3).

• For Automatic Rollover IRAs, funds received from an employer on behalf of an employee who no longer works at the company will have their balances automatically placed into our Cash Management Account.

• For Automatic Rollover IRAs administered by the Custodian, funds received from an employer, on behalf of an employee who no longer works at the company, have their balances automatically placed into the Cash Management Account.