On August 24, 2016 the IRS published Revenue Procedure 2016-47, which simplifies the steps for correcting a missed rollover from a qualified plan or IRA to another qualified plan or IRA. Amounts distributed from a qualified plan or IRA will be taxable unless they are rolled over into another plan or IRA within 60-days of the original distribution.
Previously, the IRS had established a procedure whereby taxpayers who missed the 60-day period could request a private letter ruling granting a hardship waiver of the 60-day period. This procedure necessitated a filing with the IRS and the payment of a user fee by the individual.
Revenue Procedure 2016-47 simplifies this process by allowing a qualifying taxpayer to self- correct the delayed rollover without having to seek advanced approval from the IRS for the most common causes for such inadvertent delays. The taxpayer must certify that he is eligible for the relief under Rev. Proc. 2016-47 and provide that certification to the trustee or custodian of the plan or IRA accepting the late rollover. The recipient trustee or custodian will generally be able to rely on this certification as evidence of a waiver of the 60-day requirement. A sample copy of this certification is included with the Revenue Procedure.
The simplified procedure should provide welcome relief to qualifying taxpayers who inadvertently miss the 60-day rollover window. It should also provide comfort to financial institutions faced with the decision of whether or not to accept rollover contributions that appear to fail to meet the 60-day rollover requirement.
A copy of Revenue Procedure 2016-47 can be viewed here.