Ruling to Remember: IRS First in 60-Day IRA Rollover Ruling

Monday, December 09, 2013

By The Slott Report Staff
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Private Letter Ruling 201347025 is an IRS first when it comes to the 60-day rollover rule. A taxpayer we will call “Ron” asserted that his failure to accomplish IRA rollovers within the 60-day rollover window was due to inaccurate advice from an IRS agent.

Ron owned stock in a company and participated in the company’s stock purchase program. In June 2011, the company used a monetary amount to make a stock purchase. Rather than treat the transaction as an ordinary stock purchase within Ron’s IRA, the custodian listed the transaction as a distribution on Ron’s account statement. Ron immediately contacted the company and discontinued participation in the stock purchase program.

In July, the company sent Ron a check for the amount plus earnings on the company stock. However, the returned funds were inadvertently transferred to a non-IRA investment account with the custodian. The mistake was not discovered until after the expiration of the 60-day rollover period.

Soon after, Ron contacted an IRS employee about the transaction and whether he should apply for a 60-day rollover waiver. Ron said that IRS advised him that he would receive a waiver, to take an amount out of an IRA, return it to his account and then re-execute the transfer of that amount into the IRA upon receipt of the waiver. He acted on that advice, but since it wasn’t returned within a 60-day period, the transfer was treated as a distribution.

Ron went for a private letter ruling and IRS waived the 60-day rollover requirement for both of the distributions from his IRA.  
 

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