Did you inadvertently miss the 60-day time limit for making an IRA or retirement plan rollover?
Thanks to a recent change in a new IRS procedure, requesting forgiveness for an IRA rollover error may a bit simpler now. You may be able to avoid taxes and possible penalties by notifying your account trustee with a “self-certification.” Here’s what you need to know:
When you take a distribution from your IRA or qualified plan with the intention of depositing it, or “rolling it over,” into another IRA or qualified plan, the 60-day rule says you’re required to complete the rollover within 60 days of receiving the distribution. In the past, when you missed the deadline, you generally had to request relief from the IRS. That meant paying a fee and going through a process to obtain a written statement waiving the rule.
The Change: New IRS Procedure
Now, the IRS says that in some cases you can “self-certify” by submitting a written letter to your financial institution or trustee explaining why you missed the 60-day deadline. The IRS will determine whether to issue a favorable letter ruling granting a waiver by considering all of the relevant facts and circumstances. Your error must be one of eleven allowable reasons including:
- Serious illness
- Restrictions imposed by a foreign country
- Severe damage to your principal residence
- Misplacing and never cashing the distribution check
- Postal error
The new IRS procedure provides welcome relief. However, it is important to keep in mind that you have safer options for moving your retirement funds between accounts.
Please contact us for more information. We can help make sure that you stay within the rules and avoid negative tax consequences.
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