The IRS recently published Revenue Procedure 2016-47. This revenue procedure makes it easier for individuals to qualify for a waiver when they miss the 60-day limit for an IRA rollover.
If you take a distribution from an IRA, you can classify it as a rollover if you deposit the money back into an IRA within 60-days of the initial distribution. This can be beneficial since most rollovers are not taxable. Prior to the release of Revenue Procedure 2016-47, if you missed the 60-day deadline you had to either pay the tax on the distribution or request a private letter ruling directly from the IRS to receive a waiver. The waiver will allow you to deposit the initial distribution back into an IRA after the 60-day deadline and the IRS will consider it as if you had made the deadline. Revenue Procedure 2016-47 changes the process of receiving a waiver. Instead of requesting a private letter ruling directly from the IRS, a taxpayer can now make a written certification. According to the revenue procedure, “A taxpayer may make a written certification to a plan administrator or an IRA trustee that a contribution satisfies the conditions in Section 3.02 of this revenue procedure.” This means that you are now able to write a letter to the plan administrator stating you qualify for a waiver and can make the contribution after 60 days.
There are several conditions, all which must be met, that are needed to qualify for the written certification. For example, there are a list of reasons as to why a taxpayer missed the 60-day deadline that qualify for a waiver.
Please contact us if you’re unsure if you qualify for a waiver, would like help with the written certification, or want to know more about IRA rollovers. There are different rules regarding IRS that are dependent on several different factors, so please contact us if you’d like help with your specific scenario.