The check was lost in the mail | SummitDaily.com
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The check was lost in the mail

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Dear Mr. Priest: I recently tried to roll over an IRA from my old job. My old company sent the check, but because of the postal situation up here (I’m sure you are aware of) they sent the check to my physical address instead of my post office box and it got lost in the mail. I finally received my check almost three months after it was sent. When I went to deposit the check into my IRA, I was told that since it was dated beyond 60 days old I couldn’t roll it over. Not only was the check 20 percent less than I expected, now they won’t let me roll it over into my IRA! Is there anything I can do?

Spencer

Breckenridge



Dear Spencer: Sounds like your first mistake was not performing a direct transfer from your old work plan to an IRA. According to IRS rules, if your employer sends a rollover check directly to you in your name, they must withhold 20 percent and send it off to the IRS.



In order to avoid a 10 percent penalty and taxes on the 20 percent you have 60 days to put the full amount back into an IRA. This means you must use other funds to make up the 20 percent difference and square up with the IRS at tax time.

This is a much more common mistake than you might imagine. It’s easier than you think to check one wrong box on your rollover paperwork causing this costly mistake.

The good news is, regarding the mail and your 60-day window; you definitely have an argument that may allow for an exception so you can complete the rollover after all.

The IRS can grant a waiver to the 60-day deadline if it was missed due to “hardship.” To qualify, generally the rollover must be completed less than one year after the distribution.

Some of the better known excuses have included errors on the part of your financial institution, problems with the post office, fire, flood or hospitalization.

I suggest you document the error as thoroughly as possible including a copy of the return envelope if possible. A letter from the postmaster explaining your situation may help your chances as well. As long as it was an honest error and beyond your control, you may have a good chance at rolling over your funds after all. Happy planning!

Bob Priest, MBA, CFP, is an independent certified financial planner and registered investment adviser serving clients locally and nationally. He can be reached at (877) BOB PRIEST or on his Web site at http://www.BobPriestFinancial.com. All opinions herein are those of the author and not of the Summit Daily News or its staff. Submit your financial questions to Bob@FinancialCompanies.com.


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