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If a distribution from a qualified plan or an IRA is not rolled over to another eligible retirement plan or IRA within 60 days, not only is the distribution generally taxable, but the distribution may also be subject to a 10 percent early withdrawal penalty. Up until now, if a taxpayer missed the 60-day rollover requirement, the only recourse was to request a waiver from the IRS via a letter ruling. Now, a new self-certification procedure (outlined in Revenue Procedure 2016-47) may allow taxpayers to qualify for a waiver of the 60-day retirement distribution rollover requirement without requesting a waiver directly from the IRS. If a taxpayer meets the qualifications under the Revenue Procedure, the taxpayer would provide the plan administrator a written self-certification stating that the contribution meets those requirements. To qualify under the Revenue Procedure, the IRS must not have previously denied a waiver request on the requested rollover and the taxpayer must meet one of the following specified reasons:

 An error was made by the financial institution receiving the contribution or making the distribution to which the contribution relates;

  • The distribution check was misplaced and never cashed;
  • The distribution was deposited into and remained in an account that the taxpayer mistakenly believed was an eligible retirement plan account;
  • The taxpayer's principal residence was severely damaged;
  • A member of the taxpayer's family died;
  • The taxpayer or a member of the taxpayer's 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 levy and the proceeds of which have been returned to the taxpayer; or The party making the distribution delayed providing information that the receiving plan or IRA required to complete the rollover despite the taxpayer's reasonable efforts to obtain the information.

Once the reasons listed above no longer prevent the taxpayer from making the contribution, the rollover contribution must be made to the IRA or plan as soon as possible. There is a 30-day safe harbor to make the delayed contribution. A taxpayer's plan administrator, IRA trustee, custodian or issuer may rely on this self-certification but it may be subject to verification upon audit.

For more information or questions on this topic, please contact your local UHY LLP professional, or visit us on the web at www.uhy-us.com.


By Michelle Sapula