Waiver of 60-day rollover requirement granted to taxpayer who was not provided written notice of rollover requirements

The IRS has granted a request for a waiver of the 60-day rollover requirement contained in Code Sec. 402(c)(3) where a taxpayer did not make the rollover to an individual retirement account (IRA) within the required time period because of the failure of a defined benefit plan to provide notice as required by Code Sec. 402(f), according to an IRS letter ruling. The taxpayer was given 60 days in which to accomplish the rollover to an IRA.

In December, the taxpayer requested and received a distribution of his pension from a defined benefit plan, minus federal income tax withholding. Within 60 days of receipt of the distribution, the taxpayer used a portion to pay for living expenses and deposited the remaining amount in a bank money market account. In the following April, the taxpayer met with an accountant, who informed him of the tax consequences of the distribution and that he should have been provided notice by the plan concerning a rollover into an IRA.

The IRS found that the information supplied by the taxpayer was consistent with his assertion that his inability to complete a timely rollover was due to the plan’s failure to provide proper written notice. This included documentation showing that the remaining amount was still in his money market account and had not been used for any other purpose. Therefore, the IRS waived the 60-day rollover requirement for the remaining amount and granted the taxpayer 60 days from the issuance of the letter ruling to contribute that amount to an IRA.

Source: IRS Letter Ruling 201308037.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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