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New Self-Certification Procedure for Missing the 60-Day Rollover Deadline

Posted by Jennifer V. Gateb | Oct 20, 2016 | 0 Comments

If you elect to receive a distribution to an IRA or qualified retirement plan in the form of a rollover, the distribution must be rolled over by the 60th day after the day it is received in order to qualify for tax-free rollover treatment under the Internal Revenue Code.

Absent a waiver or extension of the 60-day rollover period, amounts not rolled over within the 60-day period must be treated as a taxable distribution in the year distributed (even if the 60-day period expires in the next year).

The IRS may waive the 60-day rollover requirement in certain circumstances by granting a “hardship waiver”. To apply for a formal hardship waiver, the taxpayer must submit a request to the IRS for a letter ruling (which includes a large fee).

Fortunately, however, the IRS recently issued Rev. Proc. 2016-47, which, under certain circumstances, allows taxpayers to use a new self-certification procedure to obtain tax-free rollover treatment in lieu of a hardship waiver. While self-certification is not a formal hardship waiver issued by the IRS, it is functionally equivalent because (assuming the taxpayer has followed the applicable rules), the taxpayer may self-certify his or her eligibility to waive the 60-day rollover requirement and treat his or her distribution as a valid, tax-free rollover.

The self-certification procedure allows a taxpayer to submit a written self-certification to a plan administrator or IRA trustee describing how the rollover distribution qualifies for tax-free treatment. Absent knowledge to the contrary, the plan administrator or IRA trustee can rely on the self-certification when determining whether to waive the 60-day rollover requirement.

The IRS/plan administrator/IRA trustee will ordinarily honor a taxpayer's truthful self-certification that they qualify for a waiver under the circumstances. However, taxpayers should always keep copies of their self-certification(s) with their tax records.

Contact Butterfield Schechter LLP for more information regarding the applicable rules governing the new self-certification procedure. If you have recently elected to receive a distribution in the form of a rollover and missed the 60-day deadline to do so, our experienced attorneys can assist you through the process.

About the Author

Jennifer V. Gateb

Jennifer V. Gateb practices in the areas of general tax and estate planning, ERISA (Employee Retirement Income Security Act of 1974) and related benefit matters.


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