(1) Pursuant to the Unemployment Compensation Amendments of 1992 (Public Law 102-318 (UCA)), a member or the spouse of a member who is an eligible beneficiary entitled to a refund under Article 1, 3 or 5 of this chapter may elect on a form prescribed by the board under rules and regulations established by the board, to have an eligible rollover distribution of accumulated contributions payable under this section paid directly to an eligible retirement plan, as defined under applicable federal law, or an individual retirement account. If the member or the spouse of a member who is an eligible beneficiary makes that election and specifies the eligible retirement plan or individual retirement account to which the distribution is to be paid, the distribution will be made in the form of a direct trustee-to-trustee transfer to the specified eligible retirement plan. A non-spouse beneficiary may elect to have an eligible rollover distribution paid in the form of a direct trustee-to-trustee transfer to an individual retirement account established to receive the distribution on behalf of the non-spouse beneficiary. Flexible rollovers under this subsection shall not be considered assignments under Section 21-29-307.

(2) From and after July 1, 2001, subject to the rules adopted by the board of trustees, any plan under this chapter shall accept an eligible rollover distribution or a direct transfer of funds from another eligible retirement plan or an individual retirement account in payment of all or a portion of the cost to repay a refund as permitted by the plan. The plans may only accept rollover payments in an amount equal to or less than the balance due for reinstatement of service credit. The rules adopted by the board of trustees shall condition the acceptance of a rollover or transfer from another eligible retirement plan on the receipt of information necessary to enable the system to determine the eligibility of any transferred funds for tax-free rollover treatment or other treatment under federal income tax law.