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September 23, 2016

IRS Denies Request to Extend 60-Day Rollover Deadline for “Short-Term Loan” -PLR 201625022

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In Private Letter Ruling (PLR) 201625022, the IRS determined that an IRA owner used a distribution from her IRA as a “short-term loan”, and was therefore not eligible for a waiver of the 60-day rollover deadline.

Summary of PLR

She decided to put up her vacation home for sale, and use the proceeds to purchase her daughter’s home which was in foreclosure. The sale of the vacation home would not have been completed in time to prevent the foreclosure, so she took a distribution from her IRA and use that distribution amount to purchase her daughter’s home.

Her intent was to use the proceeds from the sale of the vacation home to complete the rollover contribution to the IRA within 60 days of receipt of the distribution. However, the sale of the vacation home was not completed until after the 60 day period had expired.

In her private letter ruling request to the IRS, she indicated that her husband was willing to take a distribution from his IRA and complete the rollover, but that was not accomplished due to a medical condition.

The IRS stated that they were not convinced that a medical condition prevented her from completing a timely rollover, as she continued to work and traveled during the period within which the rollover should have been completed.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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