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CCH® PENSION — 08/29/11

Waiver of 60-day rollover requirement granted to fix unsuccessful transfer of IRA funds back to retirement plan based on incorrect advice

Taxpayers who unsuccessfully attempted to transfer amounts from their individual retirement accounts (IRAs) to a retirement plan from which the amounts were originally distributed based on incorrect advice from their financial adviser were granted 60 days to contribute the amounts into rollover IRAs, according to IRS Letter Ruling 201122032.

When the taxpayers retired, they rolled their retirement plan distributions over to IRAs. Their financial adviser, an accountant, informed the taxpayers that their IRA funds were not as secure against third-party creditor claims as funds in tax-qualified plans. Acting on the advice of their accountant, the taxpayers requested distributions of their IRA funds and deposited the amounts in an account. The taxpayers then directed the human resources manager of their prior employer to transfer the amounts from the account into each taxpayer's account in their old retirement plan.

The human resources manager learned from the plan administrator that the taxpayers were not eligible to make a rollover contribution to the plan because they were no longer plan participants. The taxpayers represented to the IRS that they were not informed that they could not make the rollover contribution until after the expiration of the 60-day rollover period contained in Code Sec. 408(d)(3).

The IRS determined that the information and documentation submitted by the taxpayers were consistent with their assertion that their failure to make a timely rollover was caused by incorrect advice from their financial adviser. Therefore, the IRS waived the 60-day rollover requirement for the distributions from the IRAs and granted the taxpayers 60 days from the issuance of the letter ruling to contribute their funds to a rollover IRA.

For more information, visit http://www.wolterskluwerlb.com/rbcs.

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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