401K rollover to traditional IRA

[Birdbrain]

I switched jobs and old employer would not distribute my 401K amount directly to my traditional IRA account.  So i was sent a check for full amount.  Unfortunately I misplaced the check and have not deposited it in my traditional IRA account within the required 60 days.   Can I still deposit it in my traditional IRA account or a Roth IRA account since I will have to pay taxes and 10% penalty?  I appreciate any help or suggestions.  thanks

[DavidD66 · Accepted solution]

You can still deposit the funds in an IRA account under certain circumstances.  See the following from an article by Vorris J. Blankenship, that appeared in the AICPA publication "The Tax Advisor":

In the past, most individual retirement account (IRA) and retirement plan trustees have refused to accept rollover contributions of distributed funds that have been held by a taxpayer for more than 60 days, regardless of the circumstances.1 The trustees often advise the taxpayer to obtain a private letter ruling that waives the 60-day requirement. The IRS may, of course, waive the 60-day requirement if failure to do so "would be against equity or good conscience."2 Now, however, the IRS has provided a certification alternative to a letter ruling that, while not itself an IRS waiver of the 60-day requirement, allows a taxpayer to avoid the time and expense of obtaining a ruling while still reassuring skeptical trustees.

Upon receiving a proper written certification from a taxpayer, an IRA or plan trustee may now accept a rollover contribution even though the taxpayer has violated the 60-day requirement. That is, the trustee may honor the taxpayer's self-certification that he or she has permissible reasons for failing to satisfy the 60-day rollover requirement (unless the IRA trustee or plan administrator otherwise knows the rollover is not valid).3 The permissible reasons for self-certification may be any one or more of the following:

1. An error by the distributing or recipient financial institution;

2. A misplaced distribution check that was never cashed;

3. A distribution deposited and remaining in an account that the taxpayer mistakenly thought was an eligible retirement plan;

4. Severe damage to the taxpayer's principal residence;

5. Death of a member of the taxpayer's family;

6. Serious illness of the taxpayer or a member of the taxpayer's family;

7. Incarceration of the taxpayer;

8. Restrictions imposed by a foreign country;

9. A postal error;

10. A delay in obtaining information from the distributing plan or IRA that was required by the recipient plan or IRA, despite the taxpayer's reasonable efforts to obtain it; or

11. A return to the taxpayer of the proceeds of a federal tax levy on a plan or IRA.

To maintain the validity of a self-certification, taxpayers must make their rollover contribution to an IRA or plan as soon as practicable after the reasons for the delay no longer exist. However, a contribution within 30 days thereafter will automatically satisfy this requirement.

Note that a self-certification is not an IRS waiver of the 60-day rollover requirement. However, a certifying taxpayer may still report the contribution as a valid rollover until informed otherwise by the IRS. Not surprisingly, though, a certification is invalid if the IRS previously denied a waiver request with respect to a rollover of all or part of the distribution.

https://www.thetaxadviser.com/issues/2018/jan/60-day-rollover-rule.html

[Birdbrain]

Thank you for yoour helpful response.   

[richyrich]

I received a check for the balance in my ira account from one broker which I want to deposit in another ira account elsewhere.  I don't want to pay any tax.  what is the proper way of doing this?

[VolvoGirl]

Did you just get it now?  You have 60 days to deposit it in the new account.  If they took any withholding out of the check you will need to place it with your own money or the withholding will become taxable.  You will get a 1099R at the end of the year for the check.  We can help you enter it next year.