Folks tend to botch the IRA rollover which can
result in a great deal of tax and pain pleading with IRS to kindly look the
other way. IRS overburdened as it is with other matters has created a get out
of the rollover jam solution that taxpayers can self-certify. The late rollover
must be for one of 11 reasons. These include: the financial institution making the
distribution or contribution makes an error; the distribution check was
misplaced and not cashed: the taxpayer deposited a check into what he believed
was an eligible retirement plan; the taxpayer’s principal residence was
severely damaged in some type of casualty; a member of the taxpayers family
died; the taxpayer was seriously ill; the taxpayer was incarcerated;
restrictions were imposed by a foreign country; a postal error occurred; the
distribution was levied and returned to the taxpayer after the rollover
deadline; or the party making the distribution did not provide adequate
information for the receiving plan or IRA to complete the rollover. The IRS
provides a letter template which can be used to submit to the custodian of the
plan indicating which reasons apply for the late rollover. IRS says the rollover
must be placed into the new account as soon as practicable. The rollover must
be completed however within 30 days after the reason for failing to timely do
it. The easiest solution is for taxpayers to simply make the rollover from
trustee to trustee. That is, not get their hot little hands on a distribution
from their IRA. Taking a distribution and then sending it to a new IRA as a rollover
is where the problems can start. Taxpayers will not need to seek a ruling from
the Internal Revenue Service explaining the reasons for missing the rollover
and requesting more time if they fit the new procedure.IRS Rev. Proc 2016-47.
