Remedy for Over Distribution of RMD – past 60 days and due to Advisor Error
I’m trying to help an Advisor find some remedy for a significant over distribution of RMD to a client, but that is past the 60 days for rolling it back. It was in 2024. This was an Advisor error, so perhaps that changes the options. Does anyone have suggestions/guidance for correcting this, especially given that it was due to Advisor error and not made by the client?
Permalink Submitted by Alan - IRA critic on Mon, 2025-06-09 16:22
If the advisor was not an in house employee of the IRA custodian, then “custodian error” does not apply as a valid reason under RP 2020-46. There is no valid reason option for independent advisor’s errors. It’s possible that the client may qualify for another reason listed on the self cert form (eg client long term illness, death in family etc. However, the extended time delay after the 60 days expired works against using the self cert form which includes a 30 day safe harbor, either for acceptance by the IRA custodian or by the IRS if they audit these forms. Beyond that 30 days, acceptance of the form is a gray area.
If the amount is large enough client could still apply for a PLR, but these are very expensive and time consuming. Total costs of the PLR are likely upward of 20,000, so spending that much with questionable IRS approval is likely not worth it.