Michigan public employees in two large systems ask whether their retirement account balances can move into a self-directed IRA holding physical precious metals. State employees hired on or after March 31, 1997 participate in the State of Michigan 401(k) Plan, a defined contribution plan that is fully rollover-eligible at separation. Public school employees hired after September 3, 2012 participate in Pension Plus or Pension Plus 2, hybrid plans with a DB pension floor and a separately accumulated DC component. It is the DC component of those hybrid plans that is rollover-eligible, not the monthly pension. The Michigan 457 deferred compensation plan, available to many state and local government employees as a supplemental savings vehicle, follows its own rollover path. This guide describes each distribution type, the federal withholding mechanics, the Michigan income tax treatment under Public Act 4 of 2023, and how a self-directed IRA holding IRS-eligible physical metals receives the funds.
How Michigan ORS organizes public employee retirement: three plan generations
The Michigan Office of Retirement Services at michigan.gov/ors administers retirement benefits for most Michigan state and public school employees. The retirement plan a public employee participates in depends on the system they belong to and the date they were hired. Three main plan generations cover the bulk of current and recent members, and the rollover eligibility rules differ across each.
The oldest generation is a traditional defined benefit pension. State employees hired before March 31, 1997 participate in the State Employees’ Retirement System under the Michigan State Employees’ Retirement Act. Most public school employees hired before September 4, 2012 participate in the Michigan Public School Employees’ Retirement System under the old traditional pension track. A traditional DB pension pays a monthly lifetime allowance calculated by a formula that multiplies a benefit factor, years of creditable service, and final average compensation. The monthly allowance is not an account balance and cannot itself be rolled over to a self-directed IRA.
The second generation, introduced for state employees hired on or after March 31, 1997, is the State of Michigan 401(k) Plan, a pure defined contribution plan (Michigan ORS 401(k) plan page). The member contributes a percentage of salary and the state contributes an employer match. The balance accumulates in the member account, is invested in plan-offered funds, and grows with investment results. The full account balance is an eligible rollover distribution upon separation, subject to vesting on the employer matching contributions.
The third generation, introduced for Michigan Public School Employees hired after September 3, 2012, is the Pension Plus plan structure. Pension Plus applies to members hired between September 4, 2012 and January 31, 2018. Pension Plus 2 applies to members hired on or after February 1, 2018. Both are hybrid plans: each has a reduced DB floor that pays a monthly lifetime allowance, and each has a separately accumulated DC component funded by member and employer contributions. The DB floor is not rollover-eligible. The DC component is an eligible rollover distribution upon separation, in the same way as a standalone 401(k) account balance.
Which Michigan ORS distributions are rollover-eligible
Three operational paths from Michigan ORS-administered plans can fund a rollover to an IRA, including a self-directed IRA holding IRS-eligible physical precious metals. Each path has its own eligibility conditions, its own paperwork sequence, and its own tax treatment.
- Available to state employees hired on or after March 31, 1997
- Pure DC plan: employee contributions vest immediately; employer match vests on the plan schedule
- Full vested balance is rollover-eligible upon separation from state employment
- Direct rollover to traditional IRA avoids 20 percent mandatory withholding
- Contact Michigan ORS or the plan recordkeeper to initiate; confirm current form at michigan.gov/ors
- Available to MPSERS members hired on or after September 4, 2012
- DC component is separate from the DB pension floor; only the DC balance is rollover-eligible
- Rolling over the DC balance does not affect the DB pension accrual
- Direct rollover avoids 20 percent mandatory withholding; same federal rules as a standalone DC plan
- Initiate through Michigan ORS; confirm current procedures at michigan.gov/ors/mpsers
- Voluntary supplemental 457(b) plan available to state employees and many local government employers
- Pre-tax balance rolls to a traditional IRA; Roth subaccount, if any, rolls to a Roth IRA
- Governmental 457(b) early withdrawal tax carve-out does not survive a rollover to an IRA
- Separate plan document and separate distribution request from the ORS pension or 401(k)
- Direct rollover avoids 20 percent mandatory withholding
- Applies to traditional SERS, traditional MPSERS, and the DB floor of Pension Plus and Pension Plus 2
- Pays as a lifetime monthly allowance from the pension trust fund
- Not an account balance; cannot be moved to a private IRA custodian
- Required minimum distribution rules apply when the annuity is treated as a series of periodic payments
- Beneficiary lump sums from pension death benefits may have separate rollover options; confirm with ORS
The monthly pension payment is the most common form of retirement income for long-tenured Michigan public employees, particularly those in the traditional SERS or traditional MPSERS tracks. Those retirees receive a monthly check from the pension trust and do not hold an account balance that can be transferred to a self-directed IRA. Newer employees, and those in the hybrid Pension Plus plans, hold a DC account balance alongside any pension accrual, and that balance is the rollover-eligible piece.
State of Michigan 401(k) Plan: DC plan for employees hired since 1997
The State of Michigan 401(k) Plan covers state employees hired on or after March 31, 1997 under the State Employees’ Retirement Act as amended (Michigan ORS, State Employees 401(k) and DC Plan). Unlike a traditional pension, the plan builds a personal account for each participant rather than pooling contributions into a shared trust that pays a lifetime formula benefit. The participant directs the account balance among investment options offered through the plan, and the account value reflects contributions made and the investment results on those contributions.
The employee contribution rate and the employer matching rate are set by the plan document and can be updated. Employee contributions are made on a pre-tax basis, reducing Michigan and federal taxable income in the year of contribution, and they vest in the member account immediately. Employer matching contributions follow a separate vesting schedule. A member who leaves state employment before the employer match fully vests forfeits the unvested portion. The current vesting schedule is published in the Michigan ORS member handbook available at michigan.gov/ors. Reviewing the vested balance on the ORS member portal before submitting a distribution or rollover request is an important step because the rollover-eligible amount is the vested balance, not the total account value.
Upon separation from state employment, the vested account balance is an eligible rollover distribution under Internal Revenue Code Section 402(c). The member can take the balance as a direct rollover to a traditional IRA, including a self-directed IRA holding IRS-eligible physical precious metals, or as a direct rollover to the new employer plan if the new employer’s plan accepts incoming rollovers. A direct rollover sent from the Michigan ORS plan recordkeeper to the receiving custodian avoids the 20 percent mandatory federal income tax withholding. If the payment is made to the member directly, the plan is required to withhold 20 percent for federal income tax, even if the member intends to roll the funds over within the 60-day window.
The 60-day indirect rollover rule permits a member to receive the net distribution and complete the rollover within 60 days, but the member must deposit the full pre-distribution amount into the receiving IRA, including the withheld 20 percent from other funds. The amount not deposited is treated as a taxable distribution, and an additional 10 percent early distribution tax may apply if the member is under age 59 1/2 and no exception applies (IRS Retirement Topics, Tax on Early Distributions). The direct rollover route eliminates both complications.
A member who has reached the applicable required minimum distribution age under the SECURE Act 2.0 provisions must take the RMD-calculated portion as a direct payment before rolling over the remaining balance. Rolling over an RMD amount by mistake creates an excess contribution in the receiving IRA, subject to a 6 percent excise tax until corrected (IRS Publication 590-B). The plan recordkeeper and the receiving custodian can both provide guidance on computing the correct rollover-eligible amount when RMDs are in play.
Pension Plus and Pension Plus 2: the DC component for public school employees
Michigan Public School Employees hired on or after September 4, 2012 participate in a hybrid plan structure administered under MPSERS. Pension Plus covers members hired between September 4, 2012 and January 31, 2018. Pension Plus 2 covers members hired on or after February 1, 2018 (Michigan ORS, MPSERS overview). Both plans combine a reduced defined benefit floor with a separately accumulated defined contribution component funded by both the member and the employer.
The DB floor in both Pension Plus plans uses a benefit factor multiplied by years of creditable service and final average compensation. The DB component vests according to MPSERS vesting rules, which require a minimum period of creditable service. A member who separates before meeting the vesting requirement for the DB floor forfeits the DB benefit but retains the vested DC account balance. The vesting and formula details for each plan generation are published in the MPSERS member handbook available at michigan.gov/ors; members should confirm the current terms before separating.
The DC component accumulates in a separately maintained account from the DB accrual. Member contributions credited to the DC account and employer contributions credited to that account grow through the investment options selected by the member. The DC component vests on the schedule stated in the plan document. The DC account balance, to the extent vested, is an eligible rollover distribution upon separation from MPSERS-covered employment. The rollover moves only the DC balance. The DB benefit, if vested, remains with MPSERS and will pay as a monthly allowance at retirement age under the terms of the plan.
The federal withholding mechanics are the same as for the State of Michigan 401(k) Plan. A direct rollover from the MPSERS plan recordkeeper to the receiving IRA custodian avoids the 20 percent mandatory withholding. An indirect distribution triggers the withholding and requires the member to deposit the full pre-distribution amount, including the withheld funds from other sources, within 60 days to complete the rollover without tax consequences. For members below age 59 1/2, failing to complete the rollover within the window subjects the distributed amount to the 10 percent early distribution additional tax unless an exception applies (IRS Rollovers guidance).
For state income tax purposes, a direct rollover of the Pension Plus or Pension Plus 2 DC component to a traditional IRA is not a taxable event for Michigan income tax. The rollover follows the federal characterization, with the distribution reported on Form 1099-R using distribution code G. Michigan income tax on IRA distributions received in a later year is governed by the birth-year tier structure under Public Act 4 of 2023, described below.
Michigan 457 deferred compensation supplemental savings rollover
The State of Michigan 457 Plan is a voluntary governmental 457(b) deferred compensation plan available to many state employees and participating local government employers (Michigan ORS, supplemental savings). Participants defer a portion of salary on a pre-tax basis into the account, reducing current taxable income. The 457(b) contribution limits are set annually by the IRS and are separate from the 401(k) contribution limits that apply to the State of Michigan 401(k) Plan, allowing some participants to save in both vehicles simultaneously.
The governmental 457(b) plan has a distinctive feature: distributions from the plan itself are not subject to the 10 percent additional federal tax that applies to early distributions from 401(k), 403(b), and IRA accounts (IRS Retirement Topics, Tax on Early Distributions). A Michigan 457 participant who separates at any age can take a direct distribution from the 457 plan without the 10 percent penalty, regardless of age. However, the distribution is still ordinary income and is subject to federal and Michigan income tax in the year received.
When the Michigan 457 balance is rolled over to a traditional IRA rather than distributed directly, the 10 percent early distribution carve-out does not carry over. From the moment the funds are in a traditional IRA, the standard IRA early distribution rules apply: a distribution before age 59 1/2 from the IRA may be subject to the 10 percent additional tax unless an exception applies. A participant who anticipates needing the funds before 59 1/2 should weigh this change carefully before choosing to roll the 457 balance into a traditional IRA. Consult your tax advisor for your specific situation.
The rollover process from the Michigan 457 Plan to a self-directed IRA follows the same direct rollover procedure as the 401(k): the participant contacts the 457 plan administrator to initiate, specifies the receiving IRA custodian and account details, and the administrator sends the distribution directly to the custodian. The Roth designated subaccount within the 457 plan, if any, rolls to a Roth IRA rather than a traditional IRA. Required minimum distributions must be taken from the 457 balance before any remaining amount is rolled over for participants who have reached the applicable RMD age.
Who this is NOT for: limits and alternatives
Several categories of Michigan public employees and retirees are not in a position to roll a Michigan ORS balance into a self-directed gold IRA, and it is important to identify those situations clearly.
A Michigan retiree already receiving a monthly DB pension from the traditional SERS or traditional MPSERS track is not holding a rollover-eligible account balance. The monthly check is a benefit payment from the pension trust, not a withdrawal from an individual account. That monthly income cannot be redirected into a self-directed IRA. The only way that retiree could fund a gold IRA from retirement income would be through new contributions, which are subject to the annual IRA contribution limits under IRS Publication 590-A and require the retiree to have earned income in the contribution year.
A Pension Plus or Pension Plus 2 participant who leaves covered employment before vesting in the DC component forfeits the employer-contributed DC balance and may only roll over their own vested contributions to that component. The unvested employer portion is returned to the plan. In that situation, the rollover-eligible amount may be small relative to the full account balance shown on the member portal. Reviewing the vested balance at michigan.gov/ors before requesting a distribution is essential.
A participant under the industry-reported minimum account size threshold that some self-directed IRA custodians and dealers require should verify custodian requirements before proceeding. Setup fees, annual custodian fees, and storage fees for a physical metals IRA are fixed costs that weigh more heavily on smaller account balances. Whether those fixed costs are appropriate relative to the balance is a question for a licensed financial advisor, not this guide.
A participant who will need access to funds within a few years faces illiquidity in a physical metals IRA. Selling metals inside a self-directed IRA requires instruction to the custodian to liquidate, which involves spread between spot buy and sell prices and may take days to settle. Liquid savings accounts or short-term bond funds are more appropriate vehicles for funds that may be needed on short notice. Consult a licensed advisor before making retirement decisions.
Funding a self-directed gold IRA from a Michigan ORS distribution
A self-directed IRA holding IRS-eligible physical precious metals receives the rollover from a Michigan ORS plan administrator through the same trustee-to-trustee process used for any employer plan rollover. The participant opens a self-directed IRA with a qualified custodian. The custodian is a specialized IRA trustee that accepts alternative assets including physical metals, not a standard brokerage or bank that holds only publicly traded securities. The participant then initiates the rollover request with the Michigan ORS plan administrator, naming the new custodian as the receiving institution.
The plan administrator sends the distribution check or wire made payable to the custodian for the benefit of the participant. The custodian credits the funds to the new IRA. The participant then directs the purchase of eligible metals through a precious metals dealer. The dealer delivers the metals to a qualified depository in the name of the custodian, not in the name of the participant. The participant does not take physical possession of the metals while they are inside the IRA. Physical possession before a qualifying distribution event is a prohibited transaction under IRC Section 408(m) and can disqualify the entire IRA.
Eligible metals under IRC Section 408(m)(3) include American Gold Eagles described in 31 U.S. Code Section 5112(a)(7) through (10), other gold bullion meeting 99.5 percent minimum fineness, silver bullion meeting 99.9 percent minimum fineness, and platinum and palladium bullion meeting 99.95 percent minimum fineness, when held by a qualified trustee. The fineness thresholds correspond to the standards required for delivery on a regulated futures contract market. Collectible coins and products that do not meet these purity thresholds cannot be held in an IRA. The dealer and the custodian can each provide a list of eligible products they work with.
The operational sequence for a Michigan ORS rollover into a self-directed gold IRA runs as follows. First, open the self-directed IRA account with the chosen custodian and complete the account-opening paperwork, which typically includes a custodial agreement, a beneficiary designation, and an investment direction form. Second, submit the rollover request to the Michigan ORS plan administrator using the appropriate form for the plan type, specifying a direct rollover and naming the custodian. Third, the plan administrator issues the distribution check or wire to the custodian. Fourth, the custodian credits the funds and the participant directs the metals purchase. Fifth, the dealer delivers the metals to the depository in the custodian name.
The timing from rollover request submission to metals delivery varies by plan administrator processing time and custodian procedures. A direct rollover does not have a 60-day deadline in the same way as an indirect rollover, but initiating the process promptly after separation from employment avoids complications. During the period between distribution from the ORS plan and metals purchase, the funds sit in cash inside the self-directed IRA and are not invested. Past performance is not a guarantee of future results.
If the participant has reached the applicable RMD age, the plan administrator must distribute the RMD-calculated portion as a direct cash payment to the participant before sending the rollover balance to the custodian. Attempting to roll over an RMD creates an excess contribution. The excess contribution tax under IRS Publication 590-B is 6 percent of the excess amount per year until corrected. The correction is made by withdrawing the excess amount plus any earnings attributable to it by the tax filing deadline, including extensions, for the year of contribution. Consult your tax advisor for your specific situation.
For information on how to compare self-directed IRA custodian fees, review our guide on gold IRA options for Michigan residents, which covers state-specific tax context and a comparison of fee structures relevant to Michigan-based retirees.
Michigan state income tax after the rollover: the PA 4 of 2023 birth-year tiers
Michigan imposes a flat state income tax on taxable income, including IRA distributions. A direct rollover from the State of Michigan 401(k) Plan, a Pension Plus DC component, or the Michigan 457 Plan to a traditional IRA is not a taxable event in the year of the rollover. The distribution is reported on Form 1099-R with code G, and Michigan follows the federal characterization: a properly completed direct rollover is excluded from Michigan taxable income in the rollover year (Michigan Department of Treasury, retirement and pension benefits guidance).
Subsequent distributions from the traditional IRA are taxable in Michigan in the year received. The amount of Michigan income tax on IRA distributions depends on the member birth year under Public Act 4 of 2023, which the Michigan legislature passed to phase in broader retirement income exemptions. PA 4 of 2023 created four birth-year tiers that determine the deductibility of retirement income, including IRA distributions (Michigan Department of Treasury, retirement income guidance).
| Birth year tier | Michigan income tax treatment on IRA distributions | Phase-in timing |
|---|---|---|
| Born before 1946 | Full exemption of qualifying retirement income including IRA distributions, subject to income limits | Already in effect; no phase-in needed |
| Born 1946 through 1952 | Qualifying retirement income deduction available up to the applicable limits; private retirement income partially deductible | Established prior to PA 4; expanded by PA 4 |
| Born 1953 through 1960 | Phased-in retirement income deduction, increasing each tax year from 2023 through 2026 | 25 percent of deduction in 2023, 50 percent in 2024, 75 percent in 2025, 100 percent in 2026 |
| Born 1961 or later | At age 67: choose between Michigan personal exemptions or a retirement income deduction; before 67, standard Michigan income tax applies to IRA distributions | Option becomes available at age 67 |
The specific deduction amounts, income limits for each tier, and the definition of qualifying retirement income are published by the Michigan Department of Treasury and updated as the phase-in applies. Because the tiers interact with total retirement income, filing status, and other Michigan deductions, the actual Michigan tax on IRA distributions from a gold IRA funded by a Michigan ORS rollover will vary for each retiree. Verify the current thresholds and deduction amounts at michigan.gov/taxes and consult your tax advisor for your specific situation before making a rollover decision based on projected Michigan tax savings.
One additional Michigan consideration: the state of residence at the time of each IRA distribution, not the state of residence at the time of the rollover, determines which state taxes the distribution. A Michigan public employee who rolls a Michigan ORS balance into a gold IRA and later moves to a state that does not tax retirement income may receive IRA distributions free of state income tax in that future state, subject to the tax laws of that state at the time of the distribution. This outcome is not guaranteed and depends entirely on future state residency and the tax laws that apply at that time. Consult your tax advisor for your specific situation.
Three scenarios for Michigan public employees
The scenarios below illustrate the rules with hypothetical fact patterns common among Michigan ORS members. The scenarios are illustrative. They do not recommend a specific election or rollover decision. Tax outcomes depend on filing status, age, state of residence at the time of each distribution, other income, and timing. Consult your tax advisor and a licensed advisor before making any election.
Scenario A: State employee, age 52, separating from Michigan state service after 18 years in the 401(k) Plan
Anonymized profile based on a Michigan state agency employee hired in 2007 who accepts a private-sector position. The employee has been in the State of Michigan 401(k) Plan since hire, contributing on a pre-tax basis each year. The ORS member portal shows a vested 401(k) account balance of 142,000 dollars, reflecting 18 years of employee and employer contributions plus investment growth. There is no DB pension accrual for this employee, because the traditional SERS track closed to new hires in 1997.
At separation, the full vested 401(k) balance is an eligible rollover distribution. The employee is under age 59 1/2, so taking the balance as a direct cash payment would trigger ordinary income tax plus a potential 10 percent early distribution additional tax. A direct rollover to a traditional IRA, including a self-directed IRA holding IRS-eligible metals, preserves the tax-deferred status and avoids both consequences. The employee was born in 1973 and falls in the born-1961-or-later tier under PA 4 of 2023, so the full tax treatment of future IRA distributions will depend on Michigan tax law applicable when distributions begin, which the employee should verify with a tax advisor at that time.
Past performance is not a guarantee of future results. Consult a licensed advisor before making retirement decisions.
Scenario B: MPSERS teacher, age 45, leaving public education mid-career with Pension Plus DC balance
Anonymized profile based on a Michigan public school teacher hired in October 2014 who leaves public education to pursue a different career. The teacher is a Pension Plus participant, enrolled in the hybrid plan with both a DB floor and a DC component. Michigan ORS records show a vested DC component balance of 38,500 dollars. The DB pension floor has accrued years of creditable service but the teacher has not yet reached the vesting threshold for the DB benefit under the current MPSERS Pension Plus schedule.
Because the teacher has not yet vested in the DB benefit, no monthly pension payment will be available at retirement age under the Pension Plus formula for the years of service in that job. The DC component is fully vested to the extent of the member contribution, with any unvested employer DC match forfeited at separation per the plan vesting schedule published at michigan.gov/ors. The rollover-eligible amount is the vested DC component balance. That balance can be rolled directly to a traditional IRA without triggering mandatory withholding or the early distribution tax. The DB floor is forfeited for the unvested period.
The teacher should confirm the vesting status of both the DB and DC components with Michigan ORS before submitting any distribution election. Consult a licensed advisor before making retirement decisions.
Scenario C: Retiring state employee, age 63, with Michigan 457 balance alongside 401(k) rollover
Anonymized profile based on a Michigan state supervisor retiring at age 63 who has accumulated balances in both the State of Michigan 401(k) Plan and the Michigan 457 Plan over a 26-year career. The 401(k) vested balance is 310,000 dollars. The Michigan 457 pre-tax balance is 84,000 dollars. The employee was born in 1962 and falls in the born-1961-or-later tier under PA 4 of 2023.
Both balances are rollover-eligible at separation. The participant can roll each balance independently: the 401(k) balance to one IRA or custodian, and the 457 balance to the same or a different IRA. A direct rollover from each plan administrator avoids the 20 percent mandatory withholding. Rolling the 457 balance to a traditional IRA brings the early distribution rules for IRAs into effect for that balance going forward. Because the participant is under age 59 1/2 at separation, any IRA distribution taken before reaching 59 1/2 would be subject to the early distribution tax unless an exception applies.
The participant is below the applicable RMD age under SECURE Act 2.0 provisions, so no RMD computation is required before executing either rollover. The participant should confirm the current RMD age with a tax advisor at the time of the rollover. Consult your tax advisor for your specific situation. Consult a licensed advisor before making retirement decisions.
Frequently asked questions
Can Michigan state employees roll over their 401(k) to a gold IRA?
State of Michigan employees hired on or after March 31, 1997 participate in the State of Michigan 401(k) Plan. The vested balance at separation is an eligible rollover distribution under Internal Revenue Code Section 402(c) and can be rolled over to a self-directed IRA holding IRS-eligible metals. A direct rollover from the plan recordkeeper to the IRA custodian avoids the 20 percent mandatory federal withholding. Confirm the current rollover procedures with Michigan ORS at michigan.gov/ors. Consult your tax advisor for your specific situation.
Is the Pension Plus DC component rollover-eligible?
The DC component of Pension Plus and Pension Plus 2 accumulates in the member individual account separately from the DB pension floor. The vested DC balance is an eligible rollover distribution upon separation from MPSERS-covered employment. Rolling over the DC balance does not affect the DB pension accrual. Confirm the vesting status and rollover procedures with Michigan ORS before electing a distribution.
What is the 20 percent mandatory withholding rule?
When a plan administrator pays an eligible rollover distribution directly to the participant rather than to a receiving custodian, federal law requires the plan to withhold 20 percent of the taxable amount for federal income tax. A direct rollover to the custodian avoids the withholding because the funds never reach the participant. This rule applies to the State of Michigan 401(k), the Pension Plus DC component, and the Michigan 457 Plan. See IRS rollovers guidance.
What Michigan income tax applies to the rollover and later distributions?
A direct rollover to a traditional IRA is not taxable for Michigan income tax in the year of the rollover. Future IRA distributions are taxable in Michigan, with the amount subject to tax varying by birth-year tier under Public Act 4 of 2023. Tiers range from full exemption for those born before 1946 to a phased-in deduction for those born 1953 through 1960 and an age-67 option for those born 1961 or later. Verify current thresholds at michigan.gov/taxes and consult your tax advisor for your specific situation.
Can I roll over the Michigan 457 deferred compensation plan to a gold IRA?
Yes. After separation from a participating employer, the pre-tax Michigan 457 balance can be rolled to a traditional IRA including a self-directed IRA holding IRS-eligible metals. The governmental 457(b) early withdrawal tax carve-out does not carry over to the IRA; standard IRA early distribution rules apply after the rollover. A direct rollover avoids mandatory withholding. Consult your tax advisor for your specific situation.
What happens to the DB pension if I roll over the DC component?
For Pension Plus and Pension Plus 2 participants, the DB and DC components operate independently. Rolling over the DC balance does not cancel, reduce, or otherwise affect the DB pension accrual or the eventual monthly lifetime allowance the member has earned. The DB component continues under the MPSERS rules. Confirm separation procedures with Michigan ORS at michigan.gov/ors before electing a distribution.
Which metals are eligible for an IRA under IRC Section 408(m)(3)?
American Gold Eagles named in 31 U.S. Code Section 5112(a)(7) through (10) qualify by statute. Other gold, silver, platinum, and palladium bullion qualifies at 99.5 percent, 99.9 percent, and 99.95 percent fineness respectively, when held at a qualified depository in the custodian name. Collectible coins that fall outside these categories are prohibited from IRA inclusion.
What is the vesting schedule for the State of Michigan 401(k) employer match?
Employee contributions vest immediately. Employer matching contributions vest on the schedule stated in the current plan document administered by Michigan ORS. The specific schedule can change. Confirm the vesting status for the employer match by checking the ORS member portal at michigan.gov/ors before submitting a distribution or rollover request. Only the vested balance is rollover-eligible.
Are required minimum distributions excluded from a rollover?
Yes. RMDs are excluded from the definition of an eligible rollover distribution under federal law. Once a participant reaches the applicable RMD age under SECURE Act 2.0, the RMD-calculated portion must be distributed as a direct payment before any remaining balance is rolled over. Rolling an RMD creates an excess IRA contribution subject to a 6 percent excise tax per year until corrected. See IRS Publication 590-B. Consult your tax advisor for your specific situation.
Sources and methodology
This guide describes the Michigan ORS plan structures, the federal tax treatment of eligible rollover distributions under the Internal Revenue Code, and the Michigan income tax treatment under current Michigan Department of Treasury guidance including Public Act 4 of 2023. It does not give allocation, investment, tax, or retirement advice. Each factual claim links to a primary institutional source. Individual circumstances and updated Michigan ORS publications may modify the rules described here; verify the current version of every linked publication before submitting a distribution election.
- Michigan ORS, State Employees 401(k) and DC Plan: plan overview, employer contribution structure, and member portal access.
- Michigan ORS, MPSERS overview: Pension Plus and Pension Plus 2 plan structures, vesting rules, and the DB and DC component descriptions.
- Michigan Office of Retirement Services main page: member handbooks, plan documents, and current forms for all Michigan ORS retirement systems.
- Michigan Department of Treasury, retirement and pension benefits guidance: PA 4 of 2023 birth-year tiers, deduction amounts, and income limits for Michigan retirement income tax treatment.
- 26 U.S. Code Section 402(c) (Cornell Law): eligible rollover distributions from employer plans including the direct rollover and 20 percent withholding rules.
- IRS, Rollovers of Retirement Plan and IRA Distributions: 20 percent mandatory withholding rule, 60-day indirect rollover window, and direct rollover mechanics.
- IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs), including rollover rules, contribution limits, and traditional IRA eligibility.
- IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs), including RMD rules, excess contribution correction, and in-kind distribution treatment.
- IRS Required Minimum Distributions reference: RMD age under SECURE Act 2.0, exclusion from eligible rollover distribution definition, and RMD-first rule before rollover.
- IRS Retirement Topics, Tax on Early Distributions: 10 percent additional tax, exceptions including separation-from-service at 55, and governmental 457(b) carve-out that does not survive a rollover to IRA.
- 26 U.S. Code Section 408(m)(3) (Cornell Law): IRS-eligible precious metals for IRA inclusion, American Gold Eagle statutory carve-out, fineness thresholds, and qualified trustee requirement.
- 31 U.S. Code Section 5112(a)(7) through (10) (Cornell Law): denominations and specifications of American Gold Eagle coins.