The IRS finalized regulations [TD 9769 modifying Reg. §1.402A-1 A-5(a)] that were issued in proposed form in 2014 that eliminates the requirement that each disbursement form a designated Roth account that is directly rolled over to a retirement plan be treated as a separate distribution from any amount paid directly to the employee. Prior to the change if an employee had a direct rollover and an amount directly paid to the employee, each one would receive a separate allocation of pretax and after-tax amounts to each distribution.

As the preamble notes:

As a result of this change, if disbursements are made from a taxpayer’s designated Roth account to the taxpayer and also to the taxpayer’s Roth IRA or designated Roth account in a direct rollover, then pretax amounts will be allocated first to the direct rollover, rather than being allocated pro rata to each destination. Also, a taxpayer will be able to direct the allocation of pretax and after-tax amounts that are included in disbursements from a designated Roth account that are directly rolled over to multiple destinations, applying the same allocation rules to distributions from designated Roth accounts that apply to distributions from other types of accounts.

The proposed regulations were issued in 2014 providing for this change. The IRS received no comments on the regulation, but did change the language somewhat to clarify the options for distributions prior to January 1, 2016 (the effective date of the new regulations) but made after September 18, 2014 (when the proposed regulations and Notice 2014-54 describing the new options for allocations for plan distributions including rollovers were issued).