Source: IRS Rev Proc 2016-47
Generally, once per year, you can take money out of a retirement plan and roll into an IRA or other qualified retirement plan within 60 days.
Under this new procedure, the IRS allows missing the 60 day period for cause under specific circumstances. Those reasons are:
- Error by the financial institution receiving the contribution
- The distribution check was misplaced and not cashed
- The distribution was deposited into a new account thought to be an eligible retirement plan (but it wasn’t)
- The taxpayer’s residence was severely damaged
- A member of the taxpayer’s family died
- The taxpayer or a member of his/her family was seriously ill
- The taxpayer was incarcerated
- Restrictions were imposed by a foreign country
- A postal error occurred
- Two other circumstances as described in the Revenue Procedure.
30 day safe harbor: The contribution must be placed into a qualifying account within 30 days after the reason listed above no longer exists.
This certification is made in a written statement to the plan administrator or an IRA trustee, custodian, or issuer using the pattern letter in the Procedure. Administrators will likely develop forms for this purpose in short order.
This is great news for taxpayers which will keep them from having to seek an IRS Private Letter Ruling when extenuating circumstances regarding the 60-day rollover period exist.
