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Plus... Late Rollovers

Taxpayers who want to roll funds tax free from a workplace retirement plan or an individual retirement account (IRA) into another plan or IRA must complete the rollover within 60 days in order to avoid taxes and penalties.

Taxpayers who miss the 60-day rollover window generally have had two ways to rectify things: an automatic waiver, which applies only if the financial institution is at fault, or a private letter ruling from the IRS. Now, the IRS offers taxpayers a third potential option.

The new option requires a taxpayer to complete the IRS’s model certification letter and certify that the 60-day deadline was missed for one of 11 specified reasons. In addition, the taxpayer must complete the rollover “as soon as practicable”— usually within 30 days — after the reason for the delay has ceased to apply.

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