Missed Rollover Automatic Waivers

When you rollover funds from one retirement plan to another, a missed rollover occurs if you can’t complete the rollover within 60 days. A missed rollover results in a taxable distribution. However, there have always been certain specific situations that provide for exceptions to this rule, but any reasons outside that limited list required the taxpayer to request a Private Letter Ruling (PLR) from the IRS. The PLR request process could result in some significant costs for lawyers and fees.

Rev Proc 2016-47: Missed Rollover Waivers

Recently the IRS published a new procedure for handling an expanded list of exceptions for a missed rollover. This procedure, Rev. Proc. 2016-47, outlines eleven possible exceptions to the missed rollover rule. The eleven exceptions are:

1. an error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates;
2. the distribution, having been made in the form of a check, was misplaced and never cashed;
3. the distribution was deposited into and remained in an account that the taxpayer mistakenly thought was an eligible retirement plan;
4. the taxpayer’s principal residence was severely damaged;
5. a member of the taxpayer’s family died;
6. the taxpayer or a member of the taxpayer’s family was seriously ill;
7. the taxpayer was incarcerated;
8. restrictions were imposed by a foreign country;
9. a postal error occurred;
10. the distribution was made on account of a levy under § 6331 and the proceeds of the levy have been returned to the taxpayer; or
11. the party making the distribution to which the rollover relates delayed providing information that the receiving plan or IRA required to complete the rollover despite the taxpayer’s reasonable efforts to obtain the information.

There are some more rules that apply – such as, you must not have requested an exception in the past and that exception was denied – but otherwise it’s a self-certification. The IRS has even provided a sample letter that the taxpayer will use to provide this self-certification. The sample letter is provided at the bottom of the procedure notice: Rev. Proc. 2016-47.