New Self-Certification Procedure for People Making IRA and Retirement Plan Rollovers (IR-2016-113; Rev. Proc. 2016-47)

The IRS has provided a self-certification procedure designed to help recipients of retirement plan distributions who inadvertently miss the 60-day time limit for properly rolling these amounts into another retirement plan or individual retirement arrangement (IRA).

Previously, an eligible distribution from an IRA or workplace retirement plan could only qualify for tax-free rollover treatment if the money was contributed to another IRA or workplace plan by the 60th day after it was received. If this time limit was not met, early distribution taxes could apply. Waivers for this requirement could only be obtained by applying for a private letter ruling.

Following this new guidance, eligible taxpayers who missed the time limit will now ordinarily qualify for a waiver if one or more of 11 circumstances, listed in the revenue procedure, apply to them. They include a distribution check that was misplaced and never cashed, the taxpayer’s home was severely damaged, a family member died, the taxpayer or a family member was seriously ill, the taxpayer was incarcerated or restrictions were imposed by a foreign country.

Ordinarily, the IRS and plan administrators and trustees will honor a taxpayer’s truthful self-certification that they qualify for a waiver under these circumstances. Moreover, even if a taxpayer does not self-certify, the IRS now has the authority to grant a waiver during a subsequent examination. The IRS has provided a sample self-certification letter that a taxpayer can use to notify the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver.

Rev. Proc. 2016-47 is effective August 24, 2016. Rev. Proc. 2003-16, I.R.B. 2003-4, 359, is modified by providing that the IRS may grant a waiver during an examination of the taxpayer’s income tax return.

IR-2016-113

Rev. Proc. 2016-47, 2016FED ¶46,396

Other References:

Code Sec. 402

CCH Reference – 2016FED ¶18,207.022

Code Sec. 408

CCH Reference – 2016FED ¶18,922.757

Tax Research Consultant

CCH Reference – TRC RETIRE: 42,454

CCH Reference – TRC RETIRE: 66,702


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CCHTaxGroup

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