You Can Save $20,000 on IRA Rollover Even You Miss The Deadline!

A new IRS rule could save you $20,000 or more if you miss the 60-day deadline for an IRA rollover. A 60-day rollover allows an individual to move money from one retirement account to another. Missing this 60-day deadline could lead to a massive tax bill. Originally, the appeals process for missing the 60-day deadline required a private letter ruling from the IRS, which charged a fee of $10,000.  Add on professional fees to prepare the ruling and the total cost of appealing could be $20,000.

Under the new IRS rule, people will be able to complete a late 60-day rollover without penalties if they meet the three requirements below:

1. The late rollover must caused by one of the following 11 excuses:

  • An error was committed by the financial institution making the contribution or receiving the contribution.
  • The distribution was in the form of a check and the check was misplaced and never cashed.
  • The distribution was deposited into and remained in an account that you mistakenly thought was a retirement plan or IRA.
  • Your principal residence was severely damaged.
  • One of your family members died.
  • Your or one of your family members were seriously ill.
  • You were incarcerated.
  • Restrictions were imposed by a foreign country.
  • A postal error occurred.
  • The distribution was made on account of an IRS levy and the proceeds of the levy were returned to you.
  • The party making the distribution delayed providing information that the receiving plan or IRA required to complete the rollover despite your reasonable efforts to obtain the information.

2. The late rollover must be completed as soon as practicable.

3. A written letter of certification for late rollover contribution must be sent to the receiving company.


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