IRA withdrawal

[Dbb85]

I’m 65 yrs old and live in Florida. I recently did not qualify for a new primary home purchase loan based on my income, so I withdrew money from my contributory IRA to purchase the home. I was hoping to sell my old primary residence within the 60 day limit of repayment to avoid any fees or taxation. I did finally sell my old home home, but it was 90 days after the withdrawal. Would the IRS give me a waiver if I refund my IRA late , but within the same calendar?

[KNDavis]

Hi Dbb85,

You are correct that you have 60 days to complete an indirect rollover of IRA funds.  The IRS may waive the 60-day rollover requirement in certain situations, or if you missed the deadline because of circumstances beyond your control. 

According to the IRS, there are three ways to obtain a waiver of the 60 day rollover requirement:

• You qualify for an automatic waiver,
• You request and receive a private letter ruling granting a waiver, or
• You self-certified that you met the requirements of a waiver and the IRS determines during an audit of your income tax return that you qualify for a waiver.

You qualify for an automatic waiver if all of the following apply:

• The financial institution receives the funds on your behalf before the end of the 60-day rollover period.
• You followed all of the procedures set by the financial institution for depositing the funds into an IRA or other eligible retirement plan within the 60-day rollover period (including giving instructions to deposit the funds into a plan or IRA).
• The funds are not deposited into a plan or IRA within the 60-day rollover period solely because of an error on the part of the financial institution.
• The funds are deposited into a plan or IRA within 1 year from the beginning of the 60-day rollover period.
• It would have been a valid rollover if the financial institution had deposited the funds as instructed.

If you do not qualify for an automatic waiver, you can apply to the IRS for a waiver of the 60-day rollover requirement or use the self-certification procedure to make a late rollover contribution.

Here’s a link to the IRS guidance for waivers of the 60-day rollover requirement.  I hope you find this information helpful.

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Kimberly, CPA for over 30 years