Issued August 24, 2016, Rev. Proc. 2016-47 simplifies the process for correcting late rollovers from one tax-qualified retirement account to another. The guidance provides plan administrators and IRA trustees with an additional basis for accepting rollover contributions after the 60-day deadline.
When a distribution is made from a tax-qualified retirement account, such amount will be taxable unless it is rolled over into another qualified account within 60 days of the distribution. Previously under Rev. Proc. 2003-16, taxpayers who missed the 60-day period needed to apply to the IRS for a private letter ruling and pay a user fee for a waiver of the requirement. Now, pursuant to Rev. Proc. 2016-47, relief is available without IRS intervention.
To obtain relief for the missed deadline, the individual must certify to the plan administrator or IRA trustee accepting the late contribution that (i) the IRS has not previously denied a request for a waiver of the 60-day rollover requirement, (ii) the failure resulted from any of the 11 common situations listed below, and (iii) the rollover contribution is being made as soon as practicable, not to exceed 30 days, after the impediment to making such contribution no longer applies.
Eleven Situations Qualifying for Self-Correction of Late Rollover Contributions
Actions by Plan Administrators
A plan administrator or IRA trustee may rely on the individual’s certification and accept the late rollover contribution, provided the plan administrator or IRA trustee does not have actual knowledge that is contrary to such certification. Notably, the contribution must be made to the plan or IRA within 30 days after any reason listed in the certification letter no longer prevents the individual from making the contribution.
Plan administrators now have three bases for accepting late rollover contributions:
For more information on employee benefit plan services, please contact Stephen Beasy, CPA, at 574.264.2247 or please feel free to leave us a message below.