IRS issues new procedure for IRA and retirement plan rollovers

Last month, the IRS issued a self-certification procedure designed to help recipients of retirement plan distributions who inadvertently miss the 60-day time limit for properly rolling these amounts into another retirement plan or individual retirement arrangement (IRA).

Previously, taxpayers who failed to meet the time limit could only obtain a waiver by requesting a private letter ruling from the IRS. Under the new procedure, eligible taxpayers who encounter a variety of extenuating circumstances can qualify for a waiver of the 60-day time limit and avoid possible early distribution penalties.

Circumstances include:

  • A distribution check that was misplaced and never cashed,
  • If the taxpayer’s home was severely damaged,
  • Death of a family member,
  • If the taxpayer or a family member was seriously ill, or
  • Incarceration or restrictions that were imposed by a foreign country.

A full listing of the 11 mitigating circumstances, as well as a copy of a sample self-certification letter, can be found in Revenue Procedure 2016-47. Answers to commonly asked questions can be found in the FAQs relating to waivers of the 60-day rollover requirement.

For more detailed tax guidance on rollover contributions, contact a ShindelRock tax professional today.