Short answer: yes.
Longer answer: yes, and there are two ways to do it, and one of them is a trap that costs people five figures.
Here is the version that goes wrong. You accept a $280,000 pension lump sum. The plan asks where to send it. You say send it to me, figuring you will deposit it into your IRA next week.
A check arrives for $224,000.
The missing $56,000 went to the IRS as mandatory withholding. And now, to avoid paying tax on the entire $280,000, you have 60 days to deposit the full $280,000 into an IRA. Including the $56,000 you do not have.
If you cannot find it, that $56,000 becomes a taxable distribution. In a decent bracket that is a meaningful tax bill, plus a 10% penalty if you are under 59 and a half.
All of that is avoidable with one phrase on one form.
So let's go through how to do this correctly, what can and cannot be rolled, and the specific steps in the right order.
