IRS Issues Guidance For Rollover Deadline Waivers
By John H. Fenton
For years, countless taxpayers have been victimized by the strict 60-day deadline for rolling over distributions from retirement plans or individual retirement accounts. More than a year after being prodded by Congress, the IRS has finally issued guidelines for requesting waivers of the deadline.
Historically, the IRS maintained that the rollover deadline was absolute and could not be waived, even where fairness seemed to require a waiver. In response to the sometimes harsh results, the Economic Growth and Tax Relief Reconciliation Act of 2001 gave the IRS the ability to waive the 60-day rollover requirement “where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the [taxpayers] reasonable control.”
Under the new guidelines, a taxpayer may request a private letter ruling from the IRS waiving the deadline under some circumstances. The Service will consider “all relevant facts and circumstances,” such as whether financial institutions committed any errors; whether an incomplete rollover was due to death, disability, hospitalization, incarceration, or postal error; how an amount distributed was used by the taxpayer, including whether a check was cashed; and how much time elapsed since the distribution.