Waive 60 Day IRA Rollover Requirement
Waive 60-Day IRA Rollover Requirement Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
We purchased a new home this summer for $510,000 and paid for part of it ($200,000) using my SEP IRA money. We did not do this until we had sold our previous home for $700,000, which took longer to close. For whatever reason, I miscounted the 60-day rollover window. Dumb, I know. As soon as I realized it, (about 80 days) I put the money back in the IRA. So I was about 20 days late in getting the money back (and my brokerage let me put it back in as a rollover repayment). I’m guessing that the IRS is initially going to want to tax the full $200,000. Do you think that they would have any leniency on a dumb mistake like that? I didn’t intend to blow the 60-day IRA rollover requirement.
— Richard
Using your IRA as a short-term solution when you bought your home was a brilliant idea. However, as you now know, it was only a 60-day solution and then you were supposed to put the money in a rollover account. I am going to give you some information that may help you in this situation. First of all, generally you must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or employer’s plan. I checked with my broker who works at a large investment firm regarding your broker letting you put the money back in as a rollover repayment and, according to him, no documentation is required on the part of the broker to prove a rollover has occurred within the 60-day time frame. Further, when a taxpayer files a tax return listing a withdrawal and an offsetting deposit to a rollover account, he is in essence attesting to its conformity to the 60-day rule. So this means it was up to you when you opened the account and not the broker to determine if this was allowable for you. So what now? The IRS may waive the 60-day requirement where the “failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster or other event beyond your reasonable control.” There is an automatic waiver, but only if certain requirements are met. And you are not going to qualify, as the first requirement is that the financial institution had received the funds within the 60 days. Since you do not qualify for an automatic waiver, you can apply to the IRS for a waiver of the 60-day IRA rollover requirement. You can submit a request for a letter ruling under the appropriate IRS revenue procedure which is usually published in the first Internal Revenue Bulletin of the year. I checked online and it has been published under Internal Revenue Bulletin 2014-1. The IRS certainly does not make this easy, but you can give it your best shot and see if you qualify. Be forewarned that the IRS does not consider ignorance of the law or forgetfulness to be a reasonable cause. Good luck!
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: March 13, 2014 Judy O'Connor Bankrate logoThe Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logoThe Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our reporters and editors focus on the points consumers care about most — how to save for retirement, understanding the types of accounts, how to choose investments and more — so you can feel confident when planning for your future. Bankrate logoEditorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logoHow we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.We purchased a new home this summer for $510,000 and paid for part of it ($200,000) using my SEP IRA money. We did not do this until we had sold our previous home for $700,000, which took longer to close. For whatever reason, I miscounted the 60-day rollover window. Dumb, I know. As soon as I realized it, (about 80 days) I put the money back in the IRA. So I was about 20 days late in getting the money back (and my brokerage let me put it back in as a rollover repayment). I’m guessing that the IRS is initially going to want to tax the full $200,000. Do you think that they would have any leniency on a dumb mistake like that? I didn’t intend to blow the 60-day IRA rollover requirement.
— Richard
More On IRAs
Using your IRA as a short-term solution when you bought your home was a brilliant idea. However, as you now know, it was only a 60-day solution and then you were supposed to put the money in a rollover account. I am going to give you some information that may help you in this situation. First of all, generally you must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or employer’s plan. I checked with my broker who works at a large investment firm regarding your broker letting you put the money back in as a rollover repayment and, according to him, no documentation is required on the part of the broker to prove a rollover has occurred within the 60-day time frame. Further, when a taxpayer files a tax return listing a withdrawal and an offsetting deposit to a rollover account, he is in essence attesting to its conformity to the 60-day rule. So this means it was up to you when you opened the account and not the broker to determine if this was allowable for you. So what now? The IRS may waive the 60-day requirement where the “failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster or other event beyond your reasonable control.” There is an automatic waiver, but only if certain requirements are met. And you are not going to qualify, as the first requirement is that the financial institution had received the funds within the 60 days. Since you do not qualify for an automatic waiver, you can apply to the IRS for a waiver of the 60-day IRA rollover requirement. You can submit a request for a letter ruling under the appropriate IRS revenue procedure which is usually published in the first Internal Revenue Bulletin of the year. I checked online and it has been published under Internal Revenue Bulletin 2014-1. The IRS certainly does not make this easy, but you can give it your best shot and see if you qualify. Be forewarned that the IRS does not consider ignorance of the law or forgetfulness to be a reasonable cause. Good luck!