by: Elizabeth Thomas Dold    Date: 3/31/2005

This article was originally published March 28, 2005 in RIA.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) added a new rule – section 401(a)(31)(B) of the Internal Revenue Code of 1986, as amended (the "Code") – that requires plans with mandatory distributions over $1,000 to provide that, if a participant fails to elect to receive the distribution directly or have it paid to a designated plan or IRA in a direct rollover, the distribution must be made in a direct rollover to an individual retirement plan ("IRA"). The requirement becomes effective for distributions on or after March 28, 2005. The implementation of this provision raises a number of plan qualification and fiduciary issues described below. Although helpful IRS and DOL guidance has been issued to address many of the concerns, there still remain some unanswered questions and key decision points for plan sponsors to make.