IRA distribution with 60 day pay back
In mid-November I took an IRA distribution of a significant amount to help with a large purchase with intention of paying it back within the 60 day time frame. Multiple personal circumstances, none of which were financial, resulted in my forgetting to make the pay back. So now 2 months after the required pay back we are headed for a very large extra tax burden (>$50,000). Not any single one of our circumstances qualifies for an exemption under the current IRS code. We could pay back the money immediately with fines, penalties but have been told that there is a risk in appealing if it is turned down.
Does anyone have experience with this?
Thank you
AW
Permalink Submitted by Alan Spross on Wed, 2011-03-23 20:11
See post titled “waiver of 60 day rollover requirement” and reply from bsteiner.
If the money was not used for anything during the period, the chances of receiving IRS approval are improved. If health issues were involved the chances are very good.
There is no fine or penalty if the request to extend the 60 day rollover period is approved, but if you do not request a ruling your rollover would become an excess contribution and there is no statute of limitations on them. In addition, the taxes due would incur interest and penalties.
This is a significant amount, so would suggest getting a professional to handle the PLR request for you. The IRS fee is 3,000 for a rollover of this size, but there will be legal costs to prepare the request.