Retirement Plan Rollovers Just Got a Little Easier

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By Kristen Ricaurte Knebel

Aug. 24 — The IRS has made life a little bit easier for taxpayers who miss the 60-day rollover window for retirement plan distributions.

Employees can now certify to retirement plan administrators that they qualify for a waiver of the prescribed 60-day rollover period if they meet a few conditions that are set out in Revenue Procedure 2016-47, issued by the Internal Revenue Service Aug. 24.

Retirement plan administrators can rely on the self-certification that an employee missed the rollover period for at least one of the 11 reasons listed in the guidance. Among these reasons are an error committed by a financial institution, a misplaced check, the death of a family member and incarceration.

The only catch is that retirement plan administrators can’t rely on the self-certification if they know something that would contradict it, the IRS said. The self-certification also applies to rollovers to individual retirement accounts where an individual can certify to an IRA custodian the reason for missing the rollover period. When a taxpayer misses the 60-day window to roll over a retirement plan or IRA distribution, that money is subject to taxation.

Normally, if taxpayers miss the 60-day rollover requirement, they have to obtain a private letter ruling from the IRS. The self-certification process is much easier and may cut down on the volume of PLRs the IRS has to deal with, something that would help the agency, which is strapped for resources.

To take advantage of the self-correction procedure, the contribution has to be made “as soon as practicable”—up to a 30 day limit—after the reason for failing to roll the funds over ceases to be an impediment to rollover, the IRS said.

The revenue procedure, which is effective Aug. 24, also contains a model letter that can be used by taxpayers to self-certify to a retirement plan administrator or IRA trustee.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

For More Information

Text of Rev. Proc. 2016-47 is at http://src.bna.com/h0I.

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