IRA Rollovers

| 9/1/2016

In Revenue Procedure 2016-47, the IRS issued guidance allowing individual retirement account (IRA) trustees, custodians, and issuers to rely on a self-certification statement from the IRA holder that the holder qualifies for relief from the 60-day rollover requirement in certain circumstances.

Distributions from an IRA to the IRA owner are not taxable if the value of the distribution is rolled over into a qualifying IRA, individual retirement annuity, or retirement plan within 60 days after the funds are received. If an individual does not roll over the full amount of the account within 60 days, the distribution is subject to tax and, for any individuals not yet age 59½, an additional 10 percent penalty.

Taxpayers may qualify for relief under the revenue procedure if all of the following apply:

  • The IRS has not previously denied a waiver request with respect to the related transaction.
  • The taxpayer missed the 60-day deadline due to one or more of the following reasons:
    • The financial institution receiving or making the distribution of funds made an error.
    • A distribution in the form of a check was misplaced and never cashed.
    • The taxpayer’s principal residence was severely damaged.
    • A member of the taxpayer’s family died or was seriously ill.
    • The taxpayer was incarcerated.
    • Restrictions were imposed by a foreign country.
    • A postal error occurred.
    • The distribution was made due to an IRS levy, and the proceeds of the levy were returned to the taxpayer.
    • The party making the distribution delayed providing information to the receiving plan or IRA despite the taxpayer’s reasonable efforts to obtain the information.
  • Contribution of the funds is made as soon as practical after the cause of the delay is resolved, with a safe harbor deeming this treatment if the contribution is made within 30 days of that date.
  • The taxpayer provides a self-certification statement, a sample of which is provided in the revenue procedure.

IRA trustees may rely on the taxpayer’s self-certification statement and treat the contribution as a timely rollover unless they have actual knowledge to the contrary. Self-certification does not automatically grant a waiver to the taxpayer, but taxpayers may report the contribution as a valid rollover unless later informed otherwise by the IRS. Improper waivers could subject the taxpayer to additional amounts of tax, penalty, and interest. Taxpayers who fail to qualify for the automatic relief provisions still can get relief by requesting a ruling.

The relief provisions of the revenue procedure became effective on Aug. 24, 2016.

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Howard Wagner
Partner, National Tax Services