Oops – I Missed the 60-Day Window to Roll-Over My IRA

How about some good news associated with taxes? Here’s the scenario – you decide to pull funds out of a retirement account so you can put them in a new one (reasons to do this might be changing jobs, better investment options in the new plan, etc.). BUT you don’t get the transfers (called a “roll-over”) completed in 60 days and your tax advisor tells you that you’ll now have to pay a 10% penalty on the funds withdrawn PLUS regular tax on the entire amount. Yup, that’s been the IRS rule up until now unless you can get a special IRS ruling to obtain a waiver – not likely under the original rules.

The good news is the IRS has just announced a streamlined process of requesting the waiver which allows the taxpayer to “self-certify” that a justifiable condition is met that would satisfy the waiver requirement. Basically, it means the IRS will now grant a waiver if you say you qualify. One of the few instances where the IRS is agreeing to trust you.

To qualify, you must certify that one of the following applies relating to the roll-over not occurring within 60 days:

  1. An error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates;
  2. The distribution, having been made in the form of a check, was misplaced and never cashed;
  3. The distribution was deposited into and remained in an account that the taxpayer mistakenly thought was an eligible retirement plan;
  4. The taxpayer’s principal residence was severely damaged;
  5. A member of the taxpayer’s family died;
  6. The taxpayer or a member of the taxpayer’s family was seriously ill;
  7. The taxpayer was incarcerated;
  8. Restrictions were imposed by a foreign country;
  9. A postal error occurred;
  10. The distribution was made on account of a levy under § 6331 and the proceeds of the levy have been returned to the taxpayer; or
  11. The party making the distribution to which the rollover relates delayed providing information that the receiving plan or IRA required to complete the rollover despite the taxpayer’s reasonable efforts to obtain the information.

It’s that simple, if you say one of the above applies, then you get the waiver which means no 10% penalty and the funds are still treated as “qualified” and not subject to tax just like they were in the original retirement fund.

We still recommend following the IRS rules where possible so no waiver is required. But if you do miss the roll-over deadline this streamlined approach makes it much easier to get a waiver. If you’ve missed the roll-over deadline, contact us and we’ll help you determine if the new waiver process applies. Call (480) 888-7111 to schedule your free consultation or submit a web request here.

Learn more about Evan Nielsen here.