Deadline extension until Dec 2015 for removal of excess 2014 contributions
Hi there,
A client has informed the IRA custodian that he has a deadline until December 15th, 2015 to remove his excess 2014 contributions. Is it up to the custodian to verify that deadline for that client before allowing the client to make a distribution of a “Removal of excess 2014 contributions” on the 2015 1099-R?
Permalink Submitted by Alan - IRA critic on Tue, 2015-11-17 17:56
I do not know if the custodian has this responsibility. Note that the usual extended due date of 10/15 only applies if the taxpayer filed a timely extension or filed a timely return, and custodians are not asking for that evidence before accepting an excess contribution correction up to 10/15. Of course, extensions beyond 10/15 are less common and many custodians may not understand the complex rules that may result in a further two month extension. I know that the automatic 2 month extension is followed by a 4 month extension to 10/15, not by a 6 month extension to 12/15. Is there another provision under which the client is sure that he another 60 days to 12/15? If so, the custodian should honor the request if the client can produce the documentation that he is eligible. LIke many IRA custodian issues, they probably do not all handle such a request in the same manner. Some may just accept the client’s request as well and handle the entire transaction as if it was requested by 10/15.
Permalink Submitted by David Mertz on Tue, 2015-11-17 18:29
Although I’ve never heard of this being used for a return of contribution, the only way that I could see where the deadline could potentially be extended to December 15 would be if the client was abroad, timely filed Form 4868, and by October 15 sent a letter requesting (and was not denied) a discretionary additional 2-month filing extension. https://www.irs.gov/publications/p519/ch07.html