December 1, 2022 2:02 am

IRA Rollover Period Extended Due to Fraud

An individual who takes a distribution from a traditional IRA has 60 days to roll it over to another IRA or qualified retirement plan. If the rollover is not completed in time, the distribution is fully taxable (assuming no nondeductible contributions were made). However, the IRS may extend the 60-day rollover period for various reasons, such as errors by the postal service or a brokerage firm. Recently, the IRS granted a waiver of the rollover period where the IRA owner was a victim of fraud (Letter Ruling 202244029). She was swindled by hackers posing as employees of her bank’s fraud department and, pursuant to their instructions, she transferred her IRA to them. When she discovered the fraud, and reported it to a local agency, it was after the 60-day rollover period.

Remember, if you experience difficulties in timely completing a rollover, you may be able to use a self-certification process; no IRS letter ruling is needed. For details, see Rev. Proc. 2020-46.

Tax Glossary

Imputed interest

Interest deemed earned on seller-financed sales or low-interest loans, where the parties’ stated interest rate is below the applicable IRS federal rate.

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