IRS Gives People a Break on IRA Rollovers

You know that when you take money from IRAs, you have 60 days to put that amount of money in the same or a different IRA or other qualified retirement plan. If you miss the 60-day deadline, you have to treat the amount as a distribution and include it in gross income. The IRS could waive the 60-day deadline, but in the past it made it difficult to apply for a waiver and granted waivers under limited circumstances.

Yesterday the IRS issued new rules that make it easier and cheaper to receive a waiver. The waivers still are limited to 11 situations. To claim a waiver, the delay in meeting the 60-day deadline can’t be your fault.

But in Revenue Procedure 2016-47, both  issued and effective today, the IRS has created a new “self-certification” procedure that allows someone who misses the 60 day deadline to avoid the expense and delay of obtaining a private letter ruling. Instead, a taxpayer submits a model IRS letter to the  new retirement account custodian, checking in that letter one of 11 acceptable excuses for missing the deadline. This isn’t an unconditional pass—the IRA custodian will report the letter to the IRS and should the taxpayer be audited, the IRS can still determine he didn’t quality for 60 day relief.