60-day rollover time frame
Clients 60th day to rollover an IRA without penalty is Sunday. If check is overnighted it will not be received until until Monday, the 61st day. Since the 60th day was a Sunday, will the IRS OK that the rollover was done it time and no tax or penalty assessed? Rollover is going to an existing IRA account. Check was actually sent yestday but was inadvertantly overnighted to incorrect address and will be forwarded by overnight today, so custodian will have it for deposit in the account on Monday. Client can stop payment on check and have funds wired today if absolutely necessary. A very quick and prompt response would be greatly appreciated.
Permalink Submitted by mk foss on Fri, 2011-02-11 18:40
The funds are supposed to be back in the IRA on the 60th day. Recently IRS issued a ruling with a similar fact pattern – the 60th day was on a weekend and the IRS said that the Monday return was fine. This is not a general rule, however, and only applied to the taxpayer that requested it.
Much of this depends on the reporting by the custodian – if they’re going to report it to IRS as a distribution instead of a rollover or if they will not accept it because it’s late, you may need to consider the private letter ruling route.