Publication 553 - Highlights Of 2002 Tax Changes Page 23

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Waiver of the 60-day rollover requirement. To avoid
Amount. The rules regarding the amount that can be
having to include a distribution from a qualified trust or
rolled over within the 60-day time period also apply to the
individual retirement plan in your income in the year of
amount that can be deposited due to a waiver. For exam-
distribution, you generally must transfer it to an eligible
ple, if you received $6,000 from your IRA, the most that you
retirement plan no later than the 60th day after the day you
can deposit into an eligible retirement plan due to a waiver
receive it. A similar rule applies to distributions from most
is $6,000.
annuity plans, tax-sheltered annuities and eligible govern-
ment plans.
Rollovers by surviving spouses. An employee’s surviv-
For distributions after 2001, this 60-day time limit can be
ing spouse who receives an eligible rollover distribution
waived under certain circumstances. Those circum-
may roll it over into an eligible retirement plan, including an
stances are when the failure to waive the 60-day require-
IRA, a qualified plan, a section 403(b) annuity, or a section
ment would be against equity or good conscience, such as
457 plan. A surviving spouse who received an eligible
in the case of a casualty, disaster, or other events beyond
rollover distribution before 2002 could only roll it over into
your reasonable control.
an IRA.
Automatic waiver. The 60-day rollover requirement is
Expanded written explanation to rollover distribution
waived automatically only if:
recipient. Before making an eligible rollover distribution,
the administrator of a qualified retirement plan must pro-
1) The financial institution receives the funds on your
vide you with a written explanation of various qualified
behalf before the end of the 60-day rollover period,
retirement plan rollover rules. Now, the explanation must
2) You followed all the procedures set by the financial
also tell you how the distribution rules of the plan into which
institution for depositing the funds into an eligible
you roll over the distribution may differ from the rules that
retirement plan within the 60-day period (including
apply to the plan making the distribution in their restrictions
giving instructions to deposit the funds into an eligi-
and tax consequences. For more information about rol-
ble retirement plan),
lovers, see Publication 575.
3) The funds are not deposited into an eligible retire-
ment plan within the 60-day rollover period solely
2003 Changes
because of an error on the part of the financial insti-
tution,
4) The funds are deposited into an eligible retirement
Individual Retirement Arrangements
plan within 1 year from the beginning of the 60-day
rollover period, and
(IRAs)
5) It would have been a valid rollover if the financial
For more information about IRAs, see Publication 590,
institution had deposited the funds as instructed.
Individual Retirement Arrangements (IRAs).
If this applies to you, the 60-day time limit is automatically
waived.
Deemed IRAs
Waivers that must be applied for. If you do not qualify
for an automatic waiver, you must apply to the IRS for a
For plan years beginning after 2002, a qualified plan (de-
waiver of the 60-day rollover requirement. You apply by
fined later) can maintain a separate account or annuity
following the procedures for applying for a letter ruling.
under the plan to receive voluntary employee contribu-
Those procedures are stated in Revenue Procedure
tions. If the separate account or annuity otherwise meets
2003 – 4 found in Internal Revenue Bulletin 2003 –1. You
the requirements of a traditional IRA or Roth IRA, it is
must also pay a user fee of $90 with the application.
deemed a traditional IRA or Roth IRA. A deemed IRA is
In determining whether to grant a waiver, the IRS will
subject to IRA rules and not to qualified plan rules. Also,
consider all relevant facts and circumstances, including:
the deemed IRA and contributions to it are not taken into
account in applying qualified plan rules to any other contri-
1) Whether errors were made by the financial institu-
butions under the plan. Voluntary employee contributions
tion, (other than those described under Automatic
must be designated as such by employees covered under
waiver, earlier),
the plan. They are includible in income.
2) Whether you were unable to complete the rollover
Qualified plan. For deemed IRA purposes, qualified
due to death, disability, hospitalization, incarceration,
plans are defined contribution plans, defined benefit plans,
restrictions imposed by a foreign country or postal
annuity plans described in section 403(a), 403(b) plans, or
error,
section 457 deferred compensation plans.
3) Whether you used the amount distributed (for exam-
ple, in the case of payment by check, whether you
Amending the plan. If you want to provide for a deemed
cashed the check), and
IRA, you will have to amend your plan. For information on
amending your plan, see Revenue Procedure 2003 –13 in
4) How much time has passed since the date of distri-
bution.
Internal Revenue Bulletin 2003 – 4.
Chapter 3 IRAs and Other Retirement Plans
Page 23

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