IRS Eases Procedure For Late Qualified Plan And IRA Rollovers

Taxpayers who wish to transfer balances between IRAs and/or qualified retirement plan accounts can accomplish this on a tax-free basis either by making a direct trustee-to-trustee transfer between accounts or by making a qualifying rollover within 60 days. The Internal Revenue Service (IRS) has recently issued guidance that will make it easier, in many circumstances, for account holders to avoid a taxable distribution if they miss the 60 day deadline.

Background

The Internal Revenue Code contains liberal rules that allow tax-free rollovers of funds between IRAs, qualified retirement plans, Section 403(b) plans, and governmental Section 457(b) plans. A very helpful table specifying what types of rollovers are allowed can be found here. The rollover can take the form of a direct transfer of funds between the trustees of the plans or IRAs. Alternatively, the account holder can take a distribution of the funds and, within 60 days, deposit them into another plan or IRA.