Did You Miss Your Rollover Period? IRS Will Grant More Waivers

Just last week, the IRS announced that it could be easier to get a waiver for missing the 60-day deadline on retirement plan rollovers. This is great news for anyone who may have missed that deadline and would have incurred early distribution penalty taxes. Taxpayers can now apply for a one-time waiver – repeat requests will not be granted – provided they meet certain criteria.

Under normal circumstances, distributions from IRAs or other employer retirement plans must be rolled over to another retirement plan within 60 days of being received. In order to avoid paying taxes on that distribution, a waiver is necessary. Usually, a waiver is only obtained by requesting a private letter ruling from the IRS. This should come as a relief to taxpayers who may have missed the deadline.

In order to qualify for this waiver, you will have to meet one of the following criteria:

  • A financial institution made an error.
  • A check for the distribution was misplaced and never cashed.
  • The taxpayer wrongly deposited the distribution in an account believed to be an eligible retirement plan.
  • The taxpayer’s home was damaged.
  • The taxpayer had a death in the family.
  • The taxpayer or a family member faced a serious illness.
  • The taxpayer was in prison.
  • A foreign country imposed restrictions.
  • The postal service made an error.
  • The distribution was made because of a levy under Code Section 6331 (levy and distraint), the proceeds of which have been returned to the taxpayer.
  • Whoever made the distribution delayed giving information that the receiving plan or IRA needed to complete the rollover, even though the taxpayer made reasonable efforts to get the information.

Once it is established that one of these conditions has been met, you have 30 days to make your contribution.

If you have missed your rollover period, or have any other questions regarding your IRA, contact one of our CPAs today. We have extensive experience with IRAs and other retirement plans. To read more, see the article from AccountingWeb.com.