Are you looking to transfer your Teacher Retirement System (TRS) payment to an Individual Retirement Account (IRA) or an employer plan? If so, you may be wondering if you can rollover your TRS to a 401k. The answer is yes, you can rollover your TRS to a 401k, but there are some important considerations to keep in mind. When transferring your TRS payment to an IRA or employer plan, corrective distributions of excess contributions or excessive deferrals, and any income attributable to the franchise, or from excessive annual additions and any allocable gains are not eligible for reinvestment. If the reinvestment is taxable and increases customer taxes too much, the customer could partially requalify the reinvestment in a TIRA. If the contribution to the TRS was made before taxes, the cumulative qualifying contribution to the Roth IRA would be taxable, but not if those contributions were made after taxes.
To defer paying taxes on these payments, you can transfer all or part of the cumulative distribution amount to an eligible employer plan. The receiving company may ask you to write a letter of intent (LOI) in which it indicates that the customer is aware of the tax obligation and that they should code it as a Rollover in order to generate a 5498. It's important to note that the TRS should know that this is not eligible for reinvestment and, therefore, should not issue a direct reinvestment verification. Overall, transferring your TRS payment to an IRA or employer plan is possible. However, it's important to understand the tax implications and other considerations before making this decision.
