Late 60 Day Rollover Reporting

Submitted by ufleming on Mon, 2023-04-10 18:52

Background:

A prospect’s husband passed away in early 2022. She was 100% bene on her husband’s IRA and she accidentally took a 100% distribution with 0% withholding and subsequently deposited the funds into a non-retirement deposit product. The prospect intends address the large distribution by using the self-certification option and will likely opt to use the “death in the family” reason to make a rollover contribution before the filing deadline next week.

Question on Reporting:

I am unsure how reporting should be conducted for a late 60-day rollover using the self-certification route since this is a first for my practice. When the IRA account owner presents the self-certification form to the accepting custodian, should the custodian issue a 5498 for the year the rollover SHOULD have been made or the ACTUAL year the rollover contribution was made? Is the more critical component of this maneuver getting the late contribution amount reported correctly in box 13a?

Any guidance on my specific questions and other potential headwinds would be greatly appreciated!



Submitted by Alan - IRA critic on Mon, 2023-04-10 19:15

  • The main hurdle is that the IRA custodian must accept the self cert form and the late rollover. Note that the 30 day safe harbor provision in the form is rather subjective, in this case being how long after spouse’s death would be acceptable for accepting the late contribution, while also recognizing that in many cases the surviving spouse never overcomes the effects. If the custodian does not accept the contribution, perhaps a transfer to another custodian would resolve this.
  • The 5498 is issued for the year the late rollover contribution is deposited. Box 13a shows the amount rolled over. Note that any portion of the distribution that included any portion of the year of the 2022 year of death RMD is not rollover eligible. 13b should be left blank, and 13c should show “SC”.
  • These transactions are infrequent, therefore the rollover contribution and the SC form should only be presented to experienced custodian staff.  Once accepted, she can report as a rollover on Form 1040.

 

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