IRA Rollovers Extended

Any Smithtown residents who have participated in an indirect rollover should be aware of the 60-day rollover window.

An indirect rollover is any rollover in which your old retirement plan manager doesn't send the funds from your retirement account directly to your new retirement account. What takes place is that a check is cut to you and then you have 60 days to deposit those monies into the new retirement account, otherwise the rollover is deemed invalid and the funds are reclassified as distributions, subject to income tax and a 10% early withdrawal penalty.

However, a recent private-letter ruling has shown that the IRS is willing to be flexible with this 60-day timeline given certain criteria. 

For instance, the taxpayer must prove that they had intended to rollover the funds but were unable to do so due to an illness or an error made by their retirement plan administrator.

If this happens to you and you have a valid reason why the funds were not rolled over within that 60-day window, write a letter to the IRS asking them for permission to deposit the monies into the new account.

Whether you are rolling your retirement assets over into a new plan or keeping them where they are, make sure to follow the #1 Lesson Taught By Madoff's "Victims" and diversify your retirement savings.