Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
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 firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Text of Rev. Proc. 2016-47 is at http://src.bna.com/h0I.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)