RI 38-117, Rollover Election

OMB Approval. 3206-0212

United States
Office of Personnel Management
Retirement Operations
Washington, DC 20415-0001

Special Tax Notice Regarding Rollovers
The statements contained in this notice prepared by the Office of Personnel Management (OPM) are based upon a review of Internal
Revenue Service (IRS) publications, specifically Publications 575, Pension and Annuity Income, 590, Individual Retirement
Arrangements (IRAs), and 721, Tax Guide to U.S. Civil Service Retirement Benefits. However, the authority to determine income tax
liability in a particular case is vested with the IRS, not OPM. Any questions that you may have concerning tax liability in your particular
case should be addressed to the IRS.
This notice is provided to you because all or part of the payment that you will soon receive from the Office of Personnel Management
(OPM) may be eligible for rollover by you or OPM to a traditional IRA, a Roth IRA, or an eligible employer plan. A rollover is a
payment by you or OPM of all or part of your lump sum to an eligible employer plan or IRA. A rollover to a traditional IRA or an
eligible employer plan allows you to continue to postpone taxation of the lump sum until it is paid to you. You cannot postpone taxation
of the taxable portion of a lump sum payment (that is, any interest that you receive in addition to the lump sum payment of deductions
and/or voluntary contributions) if you roll it over to a Roth IRA. Your payment cannot be rolled over to a SIMPLE IRA or a Coverdell
Education Savings Account (formerly known as an education IRA). An “eligible employer plan” includes a plan qualified under section
401(a) of the Internal Revenue Code, including a 401(k) plan, profit-sharing plan, defined benefit plan, stock bonus plan, and money
purchase plan; a section 403(a) annuity plan; a section 403(b) tax-sheltered annuity; and an eligible section 457(b) plan maintained by a
governmental employer (governmental 457 plan).
An eligible employer plan is not legally required to accept a rollover. Before you decide to roll over your payment to an employer plan,
you should find out whether the plan accepts rollovers and, if so, the types of distributions it accepts as a rollover. You should also find
out about any documents that must be completed before the receiving plan will accept a rollover. Even if a plan accepts rollovers, it
might not accept rollovers of certain types of distributions, such as after-tax amounts. If this is the case and your distribution includes
after-tax amounts, you may wish instead to roll your distribution over to a traditional IRA or Roth IRA or split your rollover amount
between the employer plan in which you will participate and a traditional IRA or Roth IRA. If an employer plan accepts your rollover,
the plan may restrict subsequent distributions of the rollover amount or may require your spouse’s consent for any subsequent
distribution. A subsequent distribution from the plan that accepts your rollover may also be subject to different tax treatment than
distributions from OPM. Check with the administrator of the plan that is to receive your rollover prior to making the rollover.
If you have a Federal Retirement Thrift Savings Plan account, you may roll over the taxable portion of your lump sum into that account.
The Thrift Savings Plan (TSP) will not accept non-taxable (after-tax) monies. See Part II Direct Rollover for more information.
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Summary
There are two ways you may be able to receive a payment that is eligible for rollover:
1.

We can make certain payments directly to a traditional IRA or Roth IRA that you establish or to an eligible employer plan that will
accept it and hold it for your benefit (”Direct Rollover”); or

2.

We can make the payment to you.

If you choose a Direct Rollover:
• Your payment made directly to your traditional IRA or eligible employer plan will not be taxed in the current year and OPM will not
withhold income tax.
•

The taxable portion of your payment made directly to your Roth IRA is taxable income in the year in which the rollover is paid.
OPM will not withhold income tax unless you notify OPM in writing that 20% tax is to be withheld.

•

You choose whether your payment will be made directly to your traditional IRA, a Roth IRA, or to an eligible employer plan that
accepts your rollover. Your payment cannot be rolled over to a SIMPLE IRA or a Coverdell Education Savings Account because
these are not traditional IRA’s.

•

The taxable portion of your payment to a traditional IRA or eligible employer plan will be taxed later when you take it out of the
traditional IRA or the eligible employer plan. Depending on the type of plan, the later distribution may be subject to different tax
treatment than it would be if you received a taxable distribution from OPM. You must pay tax on the taxable portion rolled into a
Roth IRA in the year in which the rollover is made.

Previous editions are not usable

RI 37-22
Revised November 2025

If you choose to have a payment that is eligible for rollover paid to you:
•

You will receive only 80% of the taxable amount of the payment, because the Office of Personnel Management (OPM) is required to
withhold 20% of that amount and send it to the Internal Revenue Service (IRS) as income tax withholding to be credited against your
taxes.

•

The taxable amount of your payment will be taxed in the current year unless you roll it over. If you receive the payment before age
59-1/2, you may have to pay an additional 10% tax.

•

You can roll over all or part of the payment by paying it to your traditional IRA, a Roth IRA, or to an eligible employer plan that
accepts your rollover within 60 days after you receive the payment. The amount rolled over into a traditional IRA or an eligible
employer plan will not be taxed until you take it out of the traditional IRA or the eligible employer plan. You cannot postpone
taxation of taxable (pre-tax) amounts rolled over into a Roth IRA even if you roll it over into a Roth IRA within 60 days.

•

If you want to roll over 100% of the payment, you must find other money to replace the 20% of the taxable portion that was
withheld. If you roll over only the 80% you receive, you will be taxed on the 20% that was withheld and that is not rolled over.

Your Right to Waive the 30-Day Notice Period

Generally, neither a direct rollover nor a payment to you can be made until at least 30 days after your receipt of this notice. Thus, after
receiving this notice, you have at least 30 days to consider whether or not to have your withdrawal directly rolled over. If you do not wish
to wait until this 30-day notice period ends before your election is processed, you may waive the notice period by making an affirmative
election indicating whether or not you wish to make a direct rollover. Your withdrawal will then be processed in accordance with your
election as soon as practical after OPM receives it.

More Information
I.

Payments That Can and Cannot Be Rolled Over

You can also rollover after-tax contributions from a
section 403(b) tax-sheltered annuity to another section
403(b) tax-sheltered annuity using a direct rollover if the
other tax-sheltered annuity provides separate accounting
for amounts rolled over, including separate accounting for
the after-tax employee contributions and earnings on
those contributions. You cannot roll over after-tax
contributions to a governmental 457 plan. If you want to
roll over your after-tax contributions to an employer plan
that accepts these rollovers, you cannot have the after-tax
contributions paid to you first. You must instruct OPM to
make a direct rollover on your behalf. Also, you cannot
first roll over after-tax contributions to a traditional IRA
or a Roth IRA and then roll over that amount into an
employer plan.

Payments from OPM may be “eligible rollover
distributions.” This means that they can be rolled over to a
traditional IRA, a Roth IRA, or to an eligible employer plan
that accepts rollovers. Payments from OPM cannot be rolled
over to a SIMPLE IRA or a Coverdell Education Savings
Account. The interest (taxable) portion of your payment is
an eligible rollover distribution.
After-tax Contributions: The after-tax (non-taxable) portion
of your payment may be rolled into either a traditional IRA,
a Roth IRA or to certain employer plans that accept rollovers
of the after-tax contributions. The following rules apply:
a. Rollover into a Traditional IRA or a Roth IRA. You can
roll over your after-tax contributions to a traditional IRA
or a Roth IRA either directly or indirectly. OPM can tell
you how much of your payment is the taxable portion and
how much is the after-tax portion.

The following types of payments cannot be
rolled over.

Payments Spread over Long Periods. You cannot roll over
a payment if it is part of a series of equal (or almost equal)
payments that are made at least once a year and that will last
for:
• Your lifetime (or a period measured by your life
expectancy), or
• Your lifetime and your beneficiary’s lifetime (or a period
measured by your joint life expectancies), or
• A period of 10 years or more.

If you roll over after-tax contributions to a traditional IRA
or a Roth IRA, it is your responsibility to keep track of,
and report to the IRS on the applicable forms, the amount
of these after-tax contributions. This will enable the
nontaxable amount of any future distributions from the
traditional IRA to be determined.
Once you roll over your after-tax contributions to a
traditional IRA or a Roth IRA, those amounts cannot later
be rolled over to an employer plan.

II. Direct Rollover

b. Rollover into an Employer Plan. You can roll over aftertax contributions from an employer plan that is qualified
under Code section 401(a) or a section 403(a) annuity
plan to another such plan using a direct rollover if the
other plan provides separate accounting for amounts
rolled over, including separate accounting for the after-tax
employee contributions and earnings on those
contributions.

A direct rollover is a direct payment of your lump sum to a
traditional Individual Retirement Arrangement (IRA), a Roth
IRA, or an eligible employer plan that will accept it. You can
choose a direct rollover of all or any portion of your payment
that is an eligible rollover distribution, as described in Part I.
You are not taxed on any taxable portion of your payment
for which you choose a direct rollover to a traditional IRA or
eligible employer plan until you later take it out of the
traditional IRA or eligible employer plan.
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OPM will make your taxable portion of your rollover
payment directly to you the applicant.

You are taxed on any taxable portion rolled into a Roth IRA
in the year in which the rollover is made. No income tax
withholding is required for any taxable portion of your
payment for which you choose a direct rollover to a
traditional IRA. Because there is no tax withholding on
amounts less than $200, generally OPM will not let you
choose a direct rollover if your taxable payment is less than
that figure (but see Part IV below).

Once you as the applicant receive the rollover form (from
TSP), the rollover payment (from OPM) and a distribution
notice (from OPM), you will need to submit all items to the
TSP for processing. Applicants must send their rollover
packages to:
Thrift Savings Plan
c/o Broadridge Processing
PO Box 1600
Newark NJ 07101-1600

Direct Rollover to a Traditional IRA or to a Roth IRA.
You can open a traditional IRA or a Roth IRA to receive the
direct rollover. If you choose to have your payment made
directly to a traditional IRA or a Roth IRA, contact an IRA
sponsor (usually a financial institution) to find out how to
have your payment made in a direct rollover to a traditional
IRA or a Roth IRA at that institution. If you are unsure of
how to invest your money, you can temporarily establish a
traditional IRA to receive the payment. However, in
choosing a traditional IRA, you may want to make sure that
the traditional IRA you choose will allow you to move all or
a part of your payment to another traditional IRA or to a
Roth IRA at a later date, without penalties or other
limitations. See Internal Revenue Service (IRS) Publication
590, Individual Retirement Arrangements, for more
information on traditional IRAs and Roth IRAs (including
limits on how often you can roll over between IRAs).

III.Payment Paid To You

If your payment can be rolled over (see Part I on page 2)
but the payment is made to you, it is subject to 20% federal
income tax withholding on the taxable portion. The payment
is taxed in the year you receive it unless, within 60 days,
you roll it over to a traditional IRA or an eligible employer
plan that accepts rollovers. If you do not roll it over, special
tax rules may apply.
Income Tax Withholding:

Mandatory Withholding. If any portion of your payment
can be rolled over under Part I on page 2 and you do not
elect to make a direct rollover, OPM is required by law to
withhold 20% of the taxable amount. This amount is sent to
the IRS as federal income tax withholding. For example,
if you can roll over a taxable payment of $10,000, only
$8,000 will be paid to you because OPM must withhold
$2,000 as income tax. However, when you prepare your
income tax return for the year, unless you make a rollover
within 60 days (see “Sixty-Day Rollover Option”), you must
report the full $10,000 as a taxable payment from OPM.
You must report the $2,000 as tax withheld, and it will be
credited against any income tax you owe for the year. There
will be no income tax withholding if your payments for the
year are less than $200.

Direct Rollover to a Plan. If you are employed by a new
employer that has an eligible employer plan and you want a
direct rollover to that plan, ask the plan administrator of that
plan whether it will accept your rollover. An eligible
employer plan is not legally required to accept a rollover.
Even if your new employer’s plan does not accept a
rollover, you can choose a direct rollover to an IRA.
If the employer plan accepts your rollover, the plan may
provide restrictions on the circumstances under which you
may later receive a distribution of the rollover amount or
may require spousal consent to any subsequent distribution.
Check with the plan administrator of that plan before making
your decision.

Sixty-Day Rollover Option. If you receive a payment that
can be rolled over under Part I on page 2, you can still decide
to roll over all or part of it to a traditional IRA, a Roth IRA,
or to an eligible employer plan that accepts rollovers. If you
decide to roll it over, you must contribute the amount of the
payment you received to a traditional IRA, a Roth IRA, or
eligible employer plan within 60 days after you receive the
payment. The portion of your payment that is rolled over to
a traditional IRA or eligible employer plan will not be taxed
until you take it out of the traditional IRA or the eligible
employer plan.

Direct Rollover of a Series of Payments. If you receive a
payment that can be rolled over to an IRA or an eligible
employer plan that will accept it, and it is paid in a series of
payments for less than 10 years, your choice to make or not
make a direct rollover for a payment will apply to all later
payments in the series until you change your election. You
are free to change your election for any later payment in the
series.
Change in tax treatment resulting from a direct rollover.
The tax treatment of any payment from the eligible employer
plan or IRA receiving your direct rollover might be different
than if you received your lump sum in a taxable distribution
directly from OPM.

You can roll over to a traditional IRA, a Roth IRA, or to an
eligible employer plan up to 100% of your payment that can
be rolled over under Part I on page 2, including an amount
equal to the 20% of the taxable portion that was withheld if
you choose to have the 20% withheld from the rollover
amount. If you choose to roll over 100%, you must find
other money within the 60-day period to contribute to the
traditional IRA or to an eligible employer plan to replace
the 20% that was withheld. On the other hand, if you roll
over only the 80% that you received, you will be taxed on
the 20% that was withheld.

Direct Rollover to the Thrift Savings Plan (TSP).
If you choose to roll part or all of the taxable portion of your
distribution into your TSP account, you will need to contact
the TSP Thrftline Service Center (1-877-968-3778) or login
to your TSP MyAccount (tsp.gov/login) to initiate the
rollover process. You will be sent a rollover form to
complete (from the ThriftLine Service Center representative)
or one will be generated from your TSP MyAccount.

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Example: The taxable portion of your payment that can
be rolled over under Part I on page 2 is $10,000 and you
choose to have it paid to you. You will receive $8,000,
and $2,000 will be sent to the Internal Revenue Service
(IRS) as income tax withholding. Within 60 days after
receiving the $8,000, you may roll over the entire
$10,000 to a traditional IRA or eligible employer plan.
To do this, you roll over the $8,000 you received from
the Office of Personnel Management (OPM), and you
will have to find $2,000 from other sources (your savings,
a loan, etc.). In this case, the entire $10,000 is not taxed
until you take it out of the traditional IRA or an eligible
employer plan. If you roll over the entire $10,000, when
you file your income tax return, you may get a refund of
part or all of the $2,000 withheld.

The transfer will be treated as an eligible rollover
distribution and the receiving plan will be treated as an
inherited IRA. For more information on an inherited IRA,
see IRS Publication 590.

If, on the other hand, you roll over only $8,000, the
$2,000 you did not roll over is taxed in the year it was
withheld. When you file your income tax return, you may
get a refund of part of the $2,000 withheld. (However, any
tax refund is likely to be larger if you roll over the entire
$10,000.)

This notice summarizes only the Federal (not state or local)
tax rules that might apply to your payment. The rules
discussed above are complex and contain many conditions
and exceptions that are not included in this notice.
Therefore, you may want to consult with the IRS or a
professional tax advisor before you take your payment from
OPM. You can find more specific information on the tax
treatment of payments from qualified employer plans in
IRS Publication 575, Pension and Annuity Income, and IRS
Publication 590, Individual Retirement Arrangements.
For an overview of the tax consequences of payments from
the Civil Service Retirement System or the Federal
Employees Retirement System, you can also consult IRS
Publication 721, Tax Guide to U.S. Civil Service Retirement
Benefits. These publications are available from your local
IRS office, on the IRS’s internet website at www.irs.gov,
or by calling 1-800-TAX-FORMS.

If you are a beneficiary other than a surviving spouse,
alternate payee, or designated beneficiary, you cannot
choose a direct rollover, and you cannot roll over the
payment yourself.
If you are a surviving spouse, an alternate payee, or other
beneficiary, your payment is not subject to the additional
10% tax described in section III above, even if you are
younger than age 59-1/2.
How To Obtain Additional Information

Additional 10% Tax If You Are Under Age 59-1/2.
If you receive a payment before you reach age 59-1/2 and
you do not roll it over, then, in addition to the regular
income tax, you may have to pay an extra tax equal to 10%
of the taxable portion of the payment. The additional 10%
tax generally does not apply to (1) payments that are paid
after you separate from service with your employer during or
after the year you reach age 55, (2) payments that are paid
because you retire due to disability, (3) payments that are
paid directly to the government to satisfy a federal tax levy,
(4) payments that are paid to an alternate payee under a
qualified domestic relations order, or (5) payments that do
not exceed the amount of your deductible medical expenses.
See IRS Form 5329 for more information on the additional
10% tax.

Privacy Act Statement
Pursuant to 5 U.S.C. § 552a(e)(3), this Privacy Act Statement serves to
inform you of why OPM is requesting the information on this form.
Authority: OPM is authorized to collect the information requested on RI
37-22, pursuant to Public Law 107-16, which discuss the Internal Revenue
Code that allows an individual to roll over the post-tax portion of certain
distributions from OPM. Purpose: This form is used to provide a detailed
explanation of the payment election. Routine Uses: The information
requested on this form may be shared as a "routine use" to other Federal
agencies and third-parties when it is necessary to process your application.
For example, OPM may share your information with other Federal, state, or
local agencies and organizations in order to determine benefits under their
programs, to obtain information necessary for a determination of your
disability retirement benefits, or to report income for tax purposes. OPM
may also share your information with law enforcement agencies if it
becomes aware of a violation or potential violation of civil or criminal law.
A complete list of the routine uses can be found in the OPM/CENTRAL 1
Civil Service Retirement and Insurance Records system of records notice,
available at www.opm.gov/privacy. Consequences of Failure to Provide
Information: Failure to provide this information would prevent OPM
compliance with the current law.

IV. Surviving Spouses, Alternate Payees, and Other
Beneficiaries

In general, the rules summarized above that apply to
payments to employees also apply to payments to surviving
spouses of employees and to spouses or former spouses who
are “alternate payees.” You are an alternate payee if your
entitlement to payment results from a court order processed
by OPM in connection with a divorce, annulment, or legal
separation.
If you are a surviving spouse or an alternate payee, you may
choose to have a payment that can be rolled over, as
described in Part I on page 2, paid in a direct rollover to a
traditional IRA, a Roth IRA, or an eligible employer plan or
paid to you. If you have payment made to you, you can keep
it or roll it over yourself to a traditional IRA, a Roth IRA, or
to an eligible employer plan. Thus, you have the same
choices as the employee.

Public Burden Statement
The public reporting burden to complete this information collection is
estimated at 40 minutes per response, including time for reviewing
instructions, searching data sources, gathering and maintaining the data
needed, and completing and reviewing the collected information. An agency
may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB control
number. Send comments regarding this burden estimate or any other aspect
of this collection of information, including suggestions for reducing this
burden to the Office of Personnel Management, RS Publications Team at
RSPublicationsTeam@opm.gov. Current information regarding this
collection of information -- including all background materials -- can be
found at https:/www.reginfo.gov/public/do/PRAMain by using the search
function to enter "Special Tax Notice Regarding Rollovers" or 3206-0212.

If you are the designated beneficiary of a deceased employee
or retiree, but not the spouse or an alternate payee, and the
payment retiree, but not the spouse or an alternate payee, and
the payment retiree, but not the spouse or an alternate payee,
and the payment all or a portion of the distribution you
receive. The distribution must be a direct trustee-to-trustee
transfer to your IRA that was set up to receive the
distribution.
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