When it comes to the 60-day deadline for rolling over plan funds from one retirement account to another, the IRS seems to be feeling a little generous and understanding lately.
In fact, the agency just issued a new revenue procedure that allows individuals to self-certify the reason they need more than the standard 60 days to complete the rollover of retirement account funds.
Previously, in situations where individuals ran into circumstances where they needed more time, the IRS would rely on private letter rulings to extend the rollover period.
Now it seems as though the agency is going to rely on the word of individuals – as long as the extension is due to one of the reasons listed in the agency’s revenue procedure.
You’ll get an extension but …
Here are the reasons why it’s OK to miss the 60-day rollover deadline and self-certify with the IRS, courtesy of Benefits Bryan Cave:
- An error on the part of the financial institution receiving the rollover or making the distribution
- The distribution was made in the form of a check and the check was misplaced and never cashed
- The distribution was deposited into and remained in an account that the taxpayer mistakenly thought was a retirement plan or IRA
- The taxpayer’s primary residence was severely damaged
- A member of the taxpayer’s family died
- The taxpayer or a member of his or her family was seriously ill
- The taxpayer was incarcerated
- Restrictions were imposed by a foreign country
- A postal error occurred
- The distribution was made on account of a tax levy, but the proceeds of the levy were returned, and
- The financial institution making the distribution delayed providing information that the receiving plan or IRA needed to complete the rollover, despite the taxpayer’s reasonable efforts to obtain the information.
… there are some conditions
In addition to meeting the IRS reasons, individuals must make the rollover contribution “as soon as practicable” once the reason for the initial delay has been resolved. And according to the IRS, a contribution within 30 days after the issue is resolved generally meets this requirement.
As for employers, they can rely on employees’ self-certification unless they have proof the excuse is bogus.
But like all things, the IRS has the right to verify the validity of the certification via an audit