Self-certification spells relief for late IRA rollovers.

• Author: Zydel, H. Kimberly
• Position: Individual retirement accounts

Individual taxpayers are allowed to withdraw funds from an IRA without any income tax consequence, provided the funds are redeposited to the IRA (or another taxpayer-owned eligible IRA or retirement plan) within 60 days. This taxpayer-friendly provision provides taxpayers with tax-free access (i.e., a short-term loan) to retirement funds. A tax-free rollover is allowed just once in a 12-month period. With the exception of minimum required distributions, most distributions are eligible to be rolled over.

More often than one might expect, taxpayers fail to meet the 60-day rollover requirement. Sometimes, the fault lies with the taxpayer; other times, the error is out of the taxpayer's control. While the 60-day period cannot be extended, the IRS is authorized under Sec. 402(c)(3)(B) to waive it "where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement." Further relief is available in Rev. Proc. 2003-16, which states the IRS will grant automatic waivers of the 60-day period when the failure of the timely rollover is attributable to a financial institution error. For errors due to hardship, a taxpayer's only option was to file a private letter ruling requesting relief--until now, that is.

With the issuance of Rev. Proc. 2016-47, the IRS provided a self-certification procedure that allows taxpayers who fail to meet the 60-day rollover requirement to claim eligibility for a waiver. Plan administrators,

IRA trustees, custodians, or issuers can rely on this written self-certification to accept and record receipt of a rollover contribution outside of the 60-day period. A taxpayer must meet the following conditions to use the self-certification procedure:

(1) No prior denial by the IRS. The IRS must not have previously denied a waiver request with respect to a rollover of all or part of the distribution to which the contribution relates.

(2) Reason for missing 60-day deadline. The taxpayer must have missed the 60-day deadline because of the taxpayer's inability to complete a rollover due to one or more of the following reasons:

(a) an error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates;

(b) the distribution, having been made in the form of a check, was misplaced and never cashed;

(c) the distribution was deposited...