Missed 60 day Rollover

[Kram BergGold]

Client received check from a 403(b) and let the 60 day window expire. I assume there is no way to go back to the plan and say I lost the check and get a new check to start a new 60 day window, correct?

[appelman]

You can try!

It's an ingenious idea, assuming the check was never cashed. If the plan administrator cooperates, you might even get away with it.

[FEDUKE404]

Say what?

Sounds like a good idea.....until one (or both) of you gets caught red-handed.

Also, I'm not sure I follow your logic that getting a "replacement check" would actually reset the distribution date.

FE

[KathMorgan]

Wellllllll...............

Not legally and I'm betting the custodian of the account has it in ledger that the distribution has already been made based on a "cash basis" type accounting system. The distribution is made when the check is written. Now I do remember a case in Tax Court a year or so ago where a taxpayer beat that but there was negligence proven on the part of the custodian (ie.. the check never got mailed and was found in someones out box months later). Should be interesting.

[oceanlovin'ea]

illness

If the person was ill, in the hospital, in a coma or physically unable to go to make the rollover deposit, you might be able to get an exception. It seems like I have heard in the past that a situation that made it impossible for the client to take care of business might be acceptable.

Linda, EA

[Roberts]

If the person was ill, in the hospital, in a coma or physically unable to go to make the rollover deposit, you might be able to get an exception. It seems like I have heard in the past that a situation that made it impossible for the client to take care of business might be acceptable.

Linda, EA

You are right. If there is a circumstance that made it exceptionally difficult to repay in 60 days (like illness or death of a spouse), they'll give you more time.
A lost check might be a reasonable exception if the client was on record at day 8 demanding the check be canceled and reissued and he can show the check didn't show up for 20 days. At day 60? No way.

[New York Enrolled Agent]

It's an ingenious idea, assuming the check was never cashed. If the plan administrator cooperates, you might even get away with it.

Ingenious - not in my book. More like dumb.

I would suggest that Circular 230, §10.22 would not permit this under any circumstance. If memory serves me correctly, Kram recently announced that he/she is now a RTRP. Since the idea involves a matter involving the IRS and RTRPs now fall under the jurisdiction of OPR, there is no justification for an outright lie.

I fail to understand why anyone would risk their professional standing for the foolish actions of a taxpayer. This is not a "gray" area where reasonable minds could disagree. There is no suggestion in the original post that the taxpayer had any mitigating circumstances such as ill health. If the taxpayer screwed up, so be it - move on.

In any case, the issuance of a replacement check would not start a new 60-day window for a rollover.

[Roland Slugg]

Ingenious - not in my book. More like dumb.

And that's putting it nicely. Fraud is the word that came to my mind. In the OP it says the T/P received the check! Good grief. Why is the first thought that comes to some people's minds something illegal and an outright lie? As tax professionals it's our job to help our clients do things right, not cheat and lie and commit fraud.

In one of the other replies above KathMorgan wrote "The distribution is made when the check is written." That is not correct. According to the IRS in its own Pub 590: "You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer’s plan." (Emphasis added.) I believe the IRS will typically allow a 5-day mailing "grace period," so if the T/P is just barely past the 60-day rollover window, there may yet be hope. If not, his chances are very slim and would require a letter ruling and payment of a user fee just to get one. (See Pub 590, page 22)

[Kram BergGold]

Nevermind

It turns out she deposited the check and let the time lapse so nevermind.

[joanmcq]

If she has transferred to the IRA, you likely now have an overcontribution issue as well.

[KathMorgan]

My bad

And that's putting it nicely. Fraud is the word that came to my mind. In the OP it says the T/P received the check! Good grief. Why is the first thought that comes to some people's minds something illegal and an outright lie? As tax professionals it's our job to help our clients do things right, not cheat and lie and commit fraud.

In one of the other replies above KathMorgan wrote "The distribution is made when the check is written." That is not correct. According to the IRS in its own Pub 590: "You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer’s plan." (Emphasis added.) I believe the IRS will typically allow a 5-day mailing "grace period," so if the T/P is just barely past the 60-day rollover window, there may yet be hope. If not, his chances are very slim and would require a letter ruling and payment of a user fee just to get one. (See Pub 590, page 22)

I should have been more clear. I meant as far as the custodian was concerned the distribution was made when the check was written. The 60 day period does indeed start on receipt for the taxpayer. My point was that even if the tax payer was dumb enough to try to get a reissued check by committing fraud, the custodian would not "restart" the clock because of it. I completely agree that no client is worth my license, my job or most of all my integrity. I deal with the consequences of my actions or Inactions all the time. So should our clients.