60-day Rollover Requirement Waived to Fix IRA Mix-Up

Taxpayers who unsuccessfully attempted to transfer amounts from their individual retirement accounts (IRAs) to a retirement plan based on incorrect advice from their financial adviser were granted 60 days to contribute the amounts into rollover IRAs. 

The waiver announcement was made in IRS Letter Ruling 201122032. It explained that when the taxpayers retired, they rolled their retirement plan distributions over to IRAs. Their financial adviser, an accountant, informed them that their IRA funds were not as secure against third-party creditor claims as funds in tax-qualified plans. Acting on this advice, the taxpayers requested distributions of their IRA funds and deposited the amounts in an account. The taxpayers then directed the human resources manager of their prior employer to transfer the amounts from the account into each taxpayer’s account in their old retirement plan.

The human resources manager learned from the plan administrator that the taxpayers were not eligible to make a rollover contribution to the plan because they were no longer plan participants. The taxpayers told the IRS they were not informed that they could not make the rollover contribution until after the expiration of the 60-day rollover period contained in Code Sec. 408(d)(3).

The IRS determined the information and documentation submitted by the taxpayers were consistent with their assertion that their failure to make a timely rollover was caused by incorrect advice from their financial adviser. Therefore, the IRS waived the 60-day rollover requirement for the distributions from the IRAs and granted the taxpayers 60 days from the issuance of the letter ruling to contribute their funds to a rollover IRA.