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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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Don’t just “roll over” on rollover penalties

March 4, 2014

Most anyone who maintains a retirement plan or IRA is familiar with the strategy of “rolling over” funds that they receive from another plan. There is a 60-day window from the time you receive those funds to roll them over into another account. The issue here is that a distribution that is not rolled over is often exposed to significant tax penalties.
 

Unfortunately, it’s not unheard of for someone that completes the rollover paperwork to end up getting in trouble simply because their custodian didn’t submit it in time or some other logistical snafu ends up causing a delay. So here is some good news for anyone who has followed the rules and procedures and done the financially responsible thing by indicating that they would like to deposit their funds into an eligible retirement plan: even in a worst-case scenario, you still have options!
 

The IRS will automatically waive the 60 rollover rule provided that you followed the procedures and got it done within the allotted time period. You do have to prove that you followed all the procedures, and that the fault lies entirely on the part of the custodian or financial institution. What that means is that you should make a point to follow up and make sure that your rollovers are submitted in a timely fashion, but you would also be wise to always have a paper trail.
 

Don’t risk exorbitant and unnecessary tax penalties. Remember, if the mistake is yours, you are out of luck, but if the mistake is the fault of the custodian, you do have an alternative.

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