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.