Generally speaking, Maryland residents and others have 60 days to rollover funds from a 401k or IRA into a new IRA. Failure to meet this deadline could result in negative tax consequences. However, there is a chance that the IRS could allow a person to avoid financial penalties for failing to complete a rollover in a timely manner. This may be possible if a bank or other financial institution makes an error during the rollover process.
Individuals who are asking for leniency based on financial institution error should have proof that this was the case. Individuals may also be entitled to a waiver if they put money into an account that they mistakenly believed to be an IRA. If a person failed to deposit a distribution check into an IRA at all, this could be evidence that an individual didn’t think that a rollover was necessary.
It must be proven that an individual sincerely misunderstood the rules regarding a rollover. Simply failing to cash a check is generally not enough to convince the IRS to grant a waiver. As a general rule, a person receiving a distribution from an IRA should consult with a financial professional before doing so. Finally, if a home is destroyed in a natural disaster, the IRS may rule that it made it impossible for a person to complete a timely rollover.
Those who have questions about tax law may benefit from talking to a legal or financial professional. This person may be able to answer those questions or provide advice as to how to fix an error. Occasionally, the IRS may waive fees or penalties incurred because of a failure to comply with current tax law. This may be true even if the issue isn’t related to an IRA rollover.