Up until just recently, if you wanted to roll over money from an IRA or 401(k) plan (before age 59½) to a different IRA or workplace retirement
plan, you had to complete the withdrawal and new deposit within 60 days.1 If you didn’t, it would likely be classified as a nonqualified
distribution and the money withdrawn would be subject to both income taxes and a 10 percent early withdrawal penalty. You could request a waiver for
extenuating circumstances, but this would require a private letter ruling from the IRS.2
However, the IRS released in August a new self-certification procedure for taxpayers in this situation. It covers 11 different mitigating circumstances that waives the current 60-day rule. 3 Revenue Procedure 2016-47 even includes a sample Certification for Late Rollover Contribution that taxpayers can use to check off the approved reason(s) for the late deposit, sign and send to the IRS for an automatic waiver. The IRS states that even if the individual does not send in the self-certification letter, it now has the authority to grant the waiver at a later date.4
The following are the 11 circumstances under which an eligible taxpayer can qualify for tax-free rollover treatment past the requisite 60-day deadline:5
It is advisable to consult with your financial professional before making any substantial transfers to help ensure rollovers will not create new issues or impact your current financial strategy. Working with an advisor may also help you avoid missing the 60-day deadline and the need to self-certify.
1IRS. Aug. 24, 2016. “New Procedure Helps People Making IRA and Retirement Plan Rollovers.” Accessed Aug. 31, 2016.
5IRS. Aug. 24, 2016. “Revenue Procedure 2016-47" Accessed Aug. 31, 2016.
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