IRS Tax Problems

Missed a 60-Day Rollover? There May Be Relief

Missed a 60-Day Rollover? There May Be Relief

When you move from one job to another, one of the important steps you need to take care of is rolling over your qualified retirement plan into another qualified plan in a timely manner. The same is true when taking a distribution from an IRA – you have sixty days’ time in which to take the disbursement and reinvest it into a similar account without having to pay any taxes on the amount that is disbursed. Making sure that you get that done within the time frame – and only pursuing one such rollover per calendar year – should always be a priority. But what if you miss the deadline?

The good news is that even if the 60-day time limit passes, there are a couple of ways that you can still avoid having to pay the disbursement tax. Here are your options for filing for an extension: 

Private Letter Ruling (PLR)

This option may be appropriate for extremely large rollover amounts for which you cannot qualify for an automatic waiver. The process involves writing a private letter directly to the IRS and providing a thorough explanation for why you were not able to address the rollover within the 60-day time period. If the IRS agrees that your reason is legitimate and justified, they will provide you with relief from the time limit, but that relief comes at a cost of $10,000. That is why a PLR only makes sense for large amounts of money.

Financial Institution Error

You will be able to qualify for an automatic waiver of the 60-day timeframe if you can show that the delay was not your fault, but the fault of your financial institution.

Self-Certification Procedure

If you believe that your reason for missing the 60-day deadline for rolling over your qualified retirement plan falls into one of those that the IRS deems acceptable, you can take advantage of the agency’s new self-certification procedure, which allows you to bypass the 60-day rules by preparing and completing documentation on your own and providing it to either an IRA trustee or a plan administrator. There are several reasons that fall into the category of acceptable excuses that a taxpayer can submit through self-certification, including:

  • A mistake made by the financial institution
  • Having misplaced the distribution check and never having cashed it
  • Making a mistake with regard to what account the distribution check was deposited into
  • Suffering significant damage to the principal residence
  • Death of a family member
  • Serious illness of either the taxpayer or one of their family member’s
  • Taxpayer being jailed
  • Problem with the postal service
  • Kept from being able to do rollover by foreign country
  • Where an IRS levy required the distribution, and proceeds of the levy were returned to the taxpayer
  • Despite the taxpayer’s attempts at getting all of the information needed to facilitate the rollover, the party responsible for the distribution did not provide the information in time to meet the 60-day deadline. 

If you are successful in completing the self-certification process, as soon as the condition has been addressed and eliminated you need to take care of completing the rollover. The IRS expects that you will take care of the process within 30 days of the acceptable reason being addressed or past.

If you are going to pursue a self-certification, you can get a sample letter from the IRS website. You are not able to use this process if a waiver request has previously been denied for the same rollover. You should also keep in mind that the sixty-day rollover is not available for distributions that have been taken to satisfy the required minimum distribution that you need to start taking once you reach the age of 70.5.

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Gordon W. McNamee

Gordon W. McNamee

Gordon W. McNamee is a Certified Public Accountant (CPA) based in Rancho Cucamonga, CA. Gordon W. McNamee can assist you with your tax return preparation, payroll, accounting and tax planning needs. <br /> <br /> 2021 is Gordon W. McNamee, CPAs 38th year in the profession. As as a former IRS agent (1984 through 1987), Gordon has been in public accounting since 1987. Gordon specializes in individual, corporate, HOA, trust, estate and payroll taxes. He also prepares financial statements and provides accounting & bookkeeping services. He enjoys making his clients feel at ease while providing a personalized professional service.

GORDON W. MCNAMEE, CPA
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