Tuesday, October 11, 2016


Some good news from the IRS!
Taxpayers under age 59½ have 60 days from the date you receive a distribution from an IRA account to rollover the monies to a new IRA account and avoid the 10% premature withdrawal penalty.  In the past the IRS has chosen not to apply the penalty in certain special situations where the late rollover was the result of trustee error or other circumstances beyond the control of the taxpayer. 
The IRS recently issued Revenue Procedure 2016-47, which provides for a new “self-certification” procedure designed to help recipients of retirement plan distributions who, due to one or more specified reasons, inadvertently miss the 60-day time limit for properly rolling these amounts into another IRA. The new self-certification procedure allows these taxpayers to claim eligibility for a waiver of the 60-day rollover requirement that can be relied upon by a plan administrator or IRA trustee in accepting and reporting receipt of the rollover contribution.
There are 11 situations that qualify for the waiver.  They are –
1. The financial institution receiving the contribution or making the distribution to which the contribution relates made an error.
2. The distribution check was misplaced and never cashed.
3. The distribution was deposited into an account that the taxpayer mistakenly thought was an eligible retirement plan.
4. The taxpayer’s principal residence was severely damaged.
5. A member of the taxpayer’s family died.
6. The taxpayer or a member of the taxpayer’s family was seriously ill.
7. The taxpayer was incarcerated.
8. Restrictions were imposed by a foreign country.
9. The Post Office made an error.
10. The distribution was made on account of a levy under Sec. 6331, the proceeds of which have been returned to the taxpayer.
11. The party making the distribution delayed providing information that the receiving plan or IRS required to complete the rollover despite the taxpayer's reasonable efforts to obtain it.
I am currently in the process of writing a comprehensive guide on retirement savings.  I will let you know when it is completed.

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