When you "roll over" IRA money to another retirement account, you don't want to dawdle. Normally rollovers -- which can go into another IRA, a Roth or SEP IRA, or a 401(k) account, among other options -- are tax free. If you miss the IRS's deadline for making the transfer, that rule no longer applies.
The IRS gives you 60 days -- including weekends and holidays, not just business days -- to roll over the money from the IRA into your second account. If you miss the deadline but then deposit the money later, that doesn't get you off the hook for the tax. If you're younger than 59 1/2, the minimum age for making regular IRA withdrawals, the tax includes a 10 percent penalty on whatever amount wasn't rolled over.
The IRS may waive its deadline in hardship cases. If you're disabled, hospitalized, locked up or a natural disaster cuts off your banking access, you have grounds for a waiver, for instance. If you followed all the bank's instructions properly but the bank still screwed up the rollover, you have up to a year to complete the transfer. You can request an extension if the rollover gets delayed because one of the banks involved has become insolvent or bankrupt.
To request a waiver, write to the IRS with details on when you began the rollover, the accounts involved and the reason you couldn't complete it. Include documentation proving the bank error, illness or other reason you missed the deadline. Add copies of bank statements or other records showing you haven't spent the money you took out from the IRA. You must submit a user fee -- $500 for rollovers less than $50,000, as of 2012 -- along with your letter or the IRS won't consider your case.
When you make a rollover, the IRA trustee withholds 10 percent of your withdrawal for potential taxes. If you roll over $20,000, you only receive $18,000 -- but if you don't deposit $20,000 in the second account, the IRS will count the remaining $2,000 as a withdrawal, even if you complete the transfer on time. To avoid this, you have to scrounge up an extra $2,000 to make up the difference. Having the account trustees handle the transfer is a lot simpler: You don't pay any tax as you never touch the money, and there's no withholding.
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