Denise Appleby
Mistakes around individual retirement accounts and related plans happen frequently, and few are correctable.
But, according to Denise Appleby, CEO of Appleby Retirement Consulting, most are avoidable.
"We have an expression in Jamaica that says, 'Prevention is better than cure,'" she said. "It is better to prevent the mistakes than to try to fix it. Because in some cases, these mistakes can't be fixed."
Appleby covered the toll taken by some of the costliest such errors at the American College of Financial Services' Horizons 2026 retirement planning conference.
Some of the steepest penalties in the tax code apply to retirement accounts, Appleby noted. Those include losing tax-deferred status and causing double taxation, excise taxes and early distribution penalties.
A single misstep can erase years of savings.
For example, IRA distributions taken before the account owner reaches age 59.5 are subject to a 10% additional tax, an early distribution penalty, unless an exception applies.
Ignorance of the law is no excuse, said Appleby.
In past cases, the Internal Revenue Service has found that a lack of guidance from advisors or third parties is not a valid basis for a waiver of the 60-day rollover deadline.
If the money touches the client's hands, the clock starts — and the IRS does not extend deadlines for good intentions, said Appleby.
One of the most common mistakes that Appleby said she sees is violating the one-per-12-month rollover rule, which limits IRA-to-IRA 60-day rollovers to one per person over a 12-month period. It is also one of the costliest errors she sees, with consequences including a loss of tax-deferred status and a 6% excise tax if it's not corrected.
Errors may often be permanent, but the severity of the consequences depends greatly on working to make amends. That's why it's important, Appleby said, to address tax problems immediately, as delay increases the cost.
She recommends applying the appropriate corrective options under IRS self-correction and formal procedures and implementing preventive best practices. This is to ensure accurate reporting and documentation for Forms 1099-R and 5498, and to maintain tax-advantaged status.
Denise Appleby. Courtesy photo
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