4017 / What is the self-certification process that can potentially allow individuals to obtain a waiver of the 60-day time limit on rollovers?

In the past, an individual was required to obtain a private letter ruling from the IRS in order to obtain a waiver of the 60-day time limit on retirement plan rollovers, as discussed in Q 4016. The IRS has now developed a process designed to help individuals who receive retirement plan distributions, but miss the 60-day deadline. Revenue Procedure 2016-47 contains a self-certification process that can allow these individuals to qualify for a waiver of the time limit and potential penalties if one or more of 11 potential circumstances apply.

Some of the circumstances that can qualify a taxpayer for a waiver via self-certification include the following:

(1)  An error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates.

(2)  The distribution check was misplaced and never cashed.

(3)  The taxpayer’s principal residence was severely damaged.

(4)  A member of the taxpayer’s family died.

(5)  The taxpayer or a member of his or her family was severely ill.

(6)  A postal error occurred.

(7)  Restrictions were imposed by a foreign country.

(8)  The distribution was deposited into and remained in an account that the taxpayer mistakenly believed was an eligible retirement plan.

(9)  The taxpayer was incarcerated.

(10)  The distribution was made on account of a levy under IRC Section 6331 and the proceeds of the levy have been returned to the taxpayer.

(11)  The party making the distribution to which the rollover relates delayed providing information that the receiving plan or IRA required in order to complete the rollover, despite the taxpayer’s reasonable efforts to obtain that information.

(12)  The distribution was made to a state unclaimed property fund.¹

The rollover must be made as soon as practicable after the reason that prevented the rollover no longer applies (a 30-day safe harbor period exists).

The IRS has provided a form certification letter that may be used word for word (or a substantially similar letter may be used) and provided to the plan administrator or IRA trustee. The plan administrator or IRA trustee may rely on the taxpayer’s self-certification unless he or she has actual knowledge that the self-certification is false. The IRS may still determine that the taxpayer does not qualify for a waiver, but the taxpayer is entitled to report the contribution as a valid rollover unless it is informed otherwise by the IRS.²