Ruling to Remember: Math Issue Leads to 60-Day IRA Rollver Problem

Monday, May 12, 2014

By Beverly DeVeny, IRA Technical Expert

Follow Me on Twitter: @BevIRAEdSlott

A taxpayer we will call “Rebecca” represented that she received a distribution from her IRA on December 4, 2009. It was always her intent to rollover that distribution back into the IRA by the 60-day rollover deadline.

She was informed in writing by her financial institution that the redeposit deadline was February 4, 2010 (a date which was actually after the deadline). She followed that procedure and gave her financial advisor a check for the entire rollover amount for redeposit on the specified deadline date (February 4, 2010). Unfortunately, Rebecca’s rollover actually happened on day 62.

“Rebecca” was unaware of any issues until she received an assessment detailing the error from IRS dated October 31, 2011. She then removed the distribution from the IRA and requested a PLR (private letter ruling) to right the financial institution’s wrong.

Since “Rebecca” had the financial institution’s counting error in writing she was able to prove that the 60-day rollover issue was due to the institution’s errors. IRS waived the 60-day rollover requirement and granted her a period of 60 days from the ruling letter’s issuance to move the rollover amount back into the IRA.

This PLR (Ruling 201416014) demonstrates that you shouldn’t blindly rely on your financial advisor to count correctly or hope IRS doesn’t pick up on the error.

 

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