You Don’t Get a Do-Over If You Forget 60-Day Rollover Period
Monday, August 11, 2014
A taxpayer we will call “Andrea” received an IRA distribution on May 10, 2012. She used the distribution and failed to put the distribution back into her IRA within the 60-day limit.
Andrea filed a PLR (Private Letter Ruling 201429033) asserting that her failure to accomplish a rollover within 60 days was due to the fact that she used the amount to pay for medical expenses stemming from car accidents which occurred prior to the distribution. She did not have the amount available to deposit into her IRA until several months after the 60-day IRA rollover period expired.
While a sad story, IRS had to rule by the letter of the law. You can’t just forget about the 60-day rollover period or decide to extend it based on financial necessity. IRS declined her PLR request, and the entire distribution was taxable to her.
Moral of the Ruling: If you use the funds while they are out of the IRA and don’t complete the rollover in time – you generally will not be granted an extension of time to complete the rollover. It’s really that simple.
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