In HR 3361, the Technical Corrections bill to fix certain aspects of PPA 2006, there is a provision that inserts "described in paragraph (8)(b)(iii)" after "eligible retirement plan" in 402©(11)(A). I can't figure out why that change is being made, as that would indicate that until 2009, when other changes to 402©(11) kick in, only qualified plans can permit direct rollovers by non-spouse beneficiaries to inherited IRAs. In Notice 2007-7, the IRS clearly stated that 403(b) and other plans could permit the same rollovers. Is Congress tryint to retroactively reverse that position?

One of the Congressmen that worked on PPA told the IRS after they pubished Notice 2007-7, that they intend to make nonspouse direct rollovers an eligible rollover distribution. They did not intend this to be a plan provision elected option as stated in Notice 2007-7.

S. 1974 was passed by the Senate on 12/19/2007
H.R. 3361 was passed by the House on 3/12/2008

Both of these bills make a technical correction to PPA section 829. Once one of them is passed into law, plans will not longer have the plan provision option. Effective with 2009 distributions, all plans must accept a nonspouse benes request to directly rollover to an inherited IRA.