60 day rollover rule and holidays
CCH publishes a reference book “Taxation of Individual Retirement Accounts”. In this publication it states that the 60 day rollover rule is extended if the 60th day falls on a weekend or holiday, to the next business day. This is not indicated in the statues under 408(d)(3), and contrary to most every other reference publication that states no extension allowed, other then the approved “frozen deposit” and “financial institution error”. Does anyone have any authority related to the CCH reference.
Permalink Submitted by Alan Spross on Thu, 2009-06-18 21:11
I don’t know where they are coming up with that. The 60 days refers to calendar days, not business days. Now, if a taxpayer moved to a new state that had a state holiday the taxpayer was not aware of, and that holiday occurred on the 60th calendar day which was a weekday, the IRS is almost sure to allow the rollover extension upon letter ruling request. But the CCH reference appears quite different.
Permalink Submitted by Denise Appleby on Fri, 2009-06-19 13:36
[quote=”karen.birr”]CCH publishes a reference book “Taxation of Individual Retirement Accounts”. In this publication it states that the 60 day rollover rule is extended if the 60th day falls on a weekend or holiday, to the next business day. This is not indicated in the statues under 408(d)(3), and contrary to most every other reference publication that states no extension allowed, other then the approved “frozen deposit” and “financial institution error”. Does anyone have any authority related to the CCH reference.[/quote]
Karen,
I am wondering if the book was making reference to a PLR, where the taxpayer made that claim and the IRS approved the taxpayer’s request-resulting in an extension of the 60-day?
I know there are a few PLRs out there where the IRS extended the deadline to the next business day, when the deadline fell on a weekend.
Denise
Permalink Submitted by Bruce Steiner on Fri, 2009-06-19 14:15
See Section 7503.
Permalink Submitted by Denise Appleby on Fri, 2009-06-19 14:29
Which makes sense. So why does the IRS not acknowledge that? For instance, in PLR 200606055 – where the taxpayer claimed that the deadline was missed because it fell on a weekend, the IRS said the taxpayer ‘misunderstood’ the proper timeframe.
Are we to understand then that 7503 applies only in instances where the deadline is date sensitive? Like the 15th of April or October 15?
The question then becomes, one should one do on the weekend? Even if you take it to a bank that is opened on Saturday/Sunday, it is still not processed until the next business day.
Permalink Submitted by Bruce Steiner on Fri, 2009-06-19 14:40
Where a deadline falls on a Saturday, Sunday or holiday, you can avoid the issue by taking the action in question on the day before the deadline rather than on the next business day after the deadline.
Permalink Submitted by karen Birr on Fri, 2009-06-19 14:42
That’s a good point. In PLR 200634055 dated May 16, 2006 (which was a postscript in the CCH publication that I didn’t notice) the IRS did allow the rollover. The individual’s day 60 was on a Sunday, brought the check to the investment firm the next day. Investment firm would not accept the check due to it being past the 60 day rollover period. Individual filed PLR, IRS granted the rollover.
Permalink Submitted by Bruce Steiner on Fri, 2009-06-19 15:05
In PLR 200634055, if the IRA owner had gone to the financial institution early enough in the day, then after being turned away, he/she would have had enough time to go to another financial institution, or to call his/her lawyer and have the lawyer explain Section 7503 to the financial institution.