Broker Check

Hardship Doesn't Waive the 60-Day IRA Rollover Requirement

Monday, April 13, 2015
60-day rollover waived denied by IRS

By The Slott Report Staff

A taxpayer we will call "Monica" received a distribution from her IRA and another distribution from her employer retirement plan. She withdrew the retirement money during a time of employment insecurity. Following these distributions, she experienced several stressful demands on her time, including investigations related to her former employer and medical examinations.

She contended that her employment issues and lack of financial stability made it impractical to rollover the distributions during the relevant 60-day periods. Due to the termination of her employment, her income was limited to unemployment compensation and she faced expenses for COBRA premiums to extend her health insurance and for medical examinations.

She was unable to complete the purchase of personal residence, and also had the additional financial expense of car repairs. She believes that given her financial circumstances, had she completed the timely rollovers, she may have experienced adverse health consequences and a worsening of her existing health condition.

She reached into her credit line in an effort to gain financial stability and rollover the funds back to their proper accounts.

IRS denied her request for a waiver of the 60-day rollover requirement, determining that she failed to reach the standards for any of the waiver exceptions denied by law. Moral hardship will get you sympathy, but it will not get you a waiver of the 60-day rollover rule.