Except as otherwise specifically provided in this section, this section shall be effective as of January 1, 1993.

(1) ROLLOVERS GENERALLY.

a. Notwithstanding any provision of the plan to the contrary that would otherwise limit a distributee's election under this section, a distributee, at the time and in the manner prescribed by the pension board, may elect to have any portion of an eligible rollover distribution that is equal to at least two hundred dollars ($200) paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

b. For purposes of this subdivision, the following definitions shall apply:

1.(i) An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: Any distribution that is one of a series of substantially equal periodic payments, not less frequently than annually, made for the life, or life expectancy, of the distributee or the joint lives, or joint life expectancies, of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more; any distribution to the extent such distribution is required under § 401(a)(9), Internal Revenue Code; the portion of any other distribution that is not includible in gross income, determined without regard to the exclusion for net unrealized appreciation with respect to employer securities; any hardship distribution; and any other distribution that is reasonably expected to total less than two hundred dollars ($200) during a year.

(ii) Notwithstanding the above, with respect to distributions made after December 31, 2001, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of aftertax employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in § 408(a) or (b), Internal Revenue Code, or to a qualified trust described in § 401(a) Internal Revenue Code, or annuity contract described in § 403(a), Internal Revenue Code, that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

2. With respect to distributions made after December 31, 2001, an eligible retirement plan is an individual retirement account described in § 408(a), Internal Revenue Code, an individual retirement annuity described in § 408(b), Internal Revenue Code, other than an endowment contract, a qualified trust described in § 401(a), Internal Revenue Code, which is exempt from tax under § 501(a), Internal Revenue Code, that accepts the distributee's eligible rollover distribution, an annuity plan described in § 403(a), Internal Revenue Code, an eligible deferred compensation plan described in § 457(b), Internal Revenue Code, which is maintained by an eligible employer described in § 457(e)(1)(A), Internal Revenue Code, and an annuity contract described in § 403(b), Internal Revenue Code, that accepts the distributee's eligible rollover distribution.

3. A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in § 414(p), Internal Revenue Code, are distributees with regard to the interest of the spouse or former spouse.

4. A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee.

(2) DIRECT ROLLOVERS BY NON-SPOUSE BENEFICIARIES.

a. Notwithstanding the direct rollover provisions in subdivision (1), for distributions after December 31, 2009, in accordance with § 402(c)(11), Internal Revenue Code, a non-spouse beneficiary who is a designated beneficiary, as defined in § 401(a)(9)(E), Internal Revenue Code, and the regulations thereunder, by means of a direct trustee-to-trustee transfer, may roll over all or any portion of an eligible rollover distribution, as defined in § 401(a)(31), Internal Revenue Code, to an individual retirement plan the designated beneficiary establishes for purposes of receiving the distribution. If a non-spouse beneficiary receives a distribution from the plan, the distribution is not eligible for a 60-day, non-direct rollover.

b. If the member's named beneficiary is a trust, the plan may make a direct trustee-to-trustee transfer to an individual retirement plan on behalf of the trust, provided the trust satisfies the requirements to be a designated beneficiary within the meaning of § 401(a)(9)(E), Internal Revenue Code.

c. A non-spouse beneficiary may not roll over an amount which is a required minimum distribution, as determined under applicable regulations and other Internal Revenue Service guidance. If the member dies before the member's required beginning date and the non-spouse beneficiary rolls over to an individual retirement plan the maximum amount eligible for rollover, the non-spouse beneficiary may elect to use either the five-year rule or the life expectancy rule, pursuant to Treasury Regulation § 1.401(a)(9)-3, A-4(c), in determining the required minimum distributions from the individual retirement plan that receives the non-spouse beneficiary's distribution.

(3) ROLLOVER TO ROTH IRA. For distributions made after December 31, 2007, in accordance with § 408A, Internal Revenue Code, a member may elect to roll over directly an eligible rollover distribution to a Roth IRA, as defined in § 408A(b), Internal Revenue Code.