Rollover waiver due to 401 K distribution error
What chance do I have of getting a waiver of the IRA 60 day rule when my 401K custodian made an error on the NUA distribution amount and the distribution cost basis? In Sept. 2010 they reported the NUA $300k higher than their Feb 2011 revised NUA. Then they increased the cost basis in Feb 2011 over the Sept 2010 by $300k. I have 1099’s and a letter admitting this error. I would have rolled the additional $300k in Sept into a Roth IRA if I would have had the correct number. Shouldn’t the custodian get the waiver for me and bear the expenses?
Permalink Submitted by Alan Spross on Fri, 2011-03-25 20:35
There is a very good chance the IRS would extend the 60 day rollover period with evidence of a serious employer plan error like this. You might consider retaining legal counsel to petition the plan with respect to how the IRS letter ruling is to be handled…….given that if the IRS were to deny the rollover extension you would have good cause for litigation against the plan. I am assuming from your post that the error here is 100% their error and you did not contribute to the misunderstanding in any way. Sounds like they misintrepreted cost basis as NUA.
Permalink Submitted by Giles Sorrells on Fri, 2011-03-25 21:19
That’s correct, the error was 100% on them. Thanks, I’ll proceed with a tax lawyer.