Taxation Of IRA Distributions | The 60-Day Rollover Requirement And A Fraud Exception

On October 2022, I blogged about What happens to a loan taken against a qualified retirement plan when the plan terminates or employment is terminated? That blog addressed recently-effective Treasury Regulations that provided some breathing room for taxpayers with loans outstanding on a qualified employment retirement plan when the plan or the taxpayer’s employment terminates.

In a Private Letter Ruling issued by the IRS on November 4, 2022, the IRS addressed a situation where a taxpayer failed to comply with the 60-day rollover rule for excluding from gross income distributions received from an individual retirement account (IRA). The taxpayer requested a waiver of the 60-day requirement because the taxpayer’s failure was allegedly due to fraud.

Private Letter Rulings, Generally. A private letter ruling is a written statement issued by the IRS to a particular taxpayer that interprets and applies tax laws to the taxpayer’s represented set of facts. A PLR is issued in response to a written request submitted by a taxpayer. PLRs are specific to the issues presented, and usually, the PLR will include a disclaimer of application to any issue or statute not specifically addressed by the PLR. PLRs are directed only to the taxpayer who requested it. Thus, under section 6110(k)(3) of the Code, a written determination may not be used or cited as precedent. See also IRS Procedures, Frequently Asked Questions under Code, Revenue Procedures, Regulations, Letter Rulings, “How would I obtain a private letter ruling?

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