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Retirement plans: possible relief for missing 60-day rollover deadline.


Rev. Proc. 2016-47 (IRB 2016-37, Sept. 12, 2016) provides guidance regarding waivers of the 60-day rollover requirement contained in IRC secs. 402(c)(3) and 408(d) (3). It allows a self-certification procedure, subject to verification on audit, that may be used by taxpayers claiming eligibility for a waiver under secs. 402(c)(3)(B) or 408(d)(3)(I) for a rollover contribution into an employer's qualified retirement plan or IRA.

Under this procedure, a plan administrator or an IRA trustee, custodian or issuer (IRA trustee), may rely on this certification in accepting and reporting receipt of a rollover contribution.

An appendix to Rev. Proc. 2016-47 contains a model letter that may be used for self-certification.

Written Certification

A taxpayer may make a written certification to a plan administrator or IRA trustee that a contribution satisfies the conditions specified below, by using the model letter on a word-for-word basis or by using a letter substantially similar in all material respects. A copy of the certification should be kept in the taxpayer's files and available, if requested, on audit.

Conditions for Self-certification

A. No prior IRS denial. The IRS must not have previously denied a waiver request for a rollover of all or part of the distribution to which the contribution relates.

B. Reason for missing the 60-day deadline. The taxpayer must have missed this deadline because of the taxpayer's inability to complete a rollover due to one or more the following reasons:

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

2. The distribution, having been made in the form of a check, was misplaced and never cashed;

3. The distribution was deposited into and remained in an account that the taxpayer mistakenly thought was an eligible retirement plan;

4. The taxpayer's principal residence was severely damaged;

5. A member of the taxpayer's family died;

6. The taxpayer or a member of the taxpayer's family was seriously ill;

7. The taxpayer was incarcerated;

8. Restrictions were imposed by a foreign country;

9. A postal error occurred;

10. The distribution was made on account of a levy under Sec. 6331 and the proceeds of the levy have been returned to the taxpayer; or

11. The party making the distribution to which the rollover relates delayed providing information that the receiving plan or IRA required to complete the rollover, despite the taxpayer's reasonable efforts to obtain the information.

C. Contribution as soon as practicable. The contribution must be made to the plan or IRA as soon as practicable after the reason or reasons described above no longer prevent the taxpayer from making this contribution.

* 30-day safe harbor. This is deemed to be satisfied if the contribution is made within 30 days after the reason or reasons no longer prevent the taxpayer from making this contribution.

Self-Certification's Effect

I. Effect on plan administrator or IRA trustee. For purposes of accepting and reporting a rollover contribution into a plan or IRA, a plan administrator or IRA trustee may rely on a taxpayer's self-certification in determining whether the taxpayer satisfied the conditions for a waiver of the 60-day rollover requirement. However, a plan administrator or an IRA trustee may not rely on this self-certification for other purposes or if the administrator or trustee has actual knowledge that is contrary to the self-certification.

II. Effect on taxpayers. A self-certification is not a waiver by the IRS of the 60-day rollover requirement. However, a taxpayer may report the contribution as a valid rollover unless later informed otherwise by the IRS. The IRS, during an examination, may consider whether a taxpayer's contribution meets the waiver requirements. For example, the IRS may determine that these requirements were not met because of:

* A material misstatement in the self-certification;

* The reason or reasons claimed by the taxpayer for missing the 60-day deadline did not prevent the taxpayer from completing the rollover within 60 days following receipt; or

* The taxpayer failed to make the contribution as soon as practicable after the reason or reasons no longer prevented the taxpayer from making the contribution.

Stuart R. Josephs, CPA has a San Diego-based Tax Assistance Practice that specializes in assisting practitioners in resolving their clients' tax questions and problems. Josephs, chair of the Federal Subcommittee of CalCPA's Committee on Taxation, can be reached at (619) 469-6999 or
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Title Annotation:Fed Tax
Author:Josephs, Stuart R.
Publication:California CPA
Date:Oct 1, 2016
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