Susan D. Diehl
How much does the IRS charge for a private letter ruling (PLR) requesting a waiver of the 60-day rollover period?
The quick answer is — ‘it used to be extremely reasonable’ but on Jan. 4, 2016 (effective Feb. 1, 2016), the IRS increased this fee dramatically! Under the previous fee schedules (before 2016), PLR requests for a waiver request of the 60-day rollover period due to a hardship were based on the amount of the rollover. For example, the fees in 2015 were as follows:
- Rollover less than $50,000: $500
- Rollover equal to or greater than $50,000 and less than $100,000: $1,500
- Rollover equal to or greater than $100,000: $3,000
Under IRS Revenue Procedure 2016-8, this fee structure was eliminated, and the 60 day rollover waivers now fall under the category of “All other letter rulings,” which comes with a hefty price-tag of $10,000!
Additionally, the IRS also eliminated the reduced fee of $4,000 for PLR request on Roth IRA recharacterizations; these too are now subject to the $10,000 fee.
Also remember that if the error was that of the financial institution, there is actually a one-year correction period to self-correct from the date of the error. This correction does not need a PLR, the institution merely corrects the error. For example, a participant requests a direct rollover from a 403(b) to their traditional IRA. The financial institution deposits the “rollover” into a Roth IRA and it is not discovered until six months after the transaction. The financial institution corrects the transaction by putting the rollover plus the gains and losses in the traditional IRA, and corrects all of the reporting going back to the transaction date.
So before you or a client wishes to submit for a waiver of the 60 days, check to make sure that the amount of the rollover warrants the price for a PLR!Susan D. Diehl, CPC, QPA, ERPA, is President, PenServ Plan Services, Inc. and Chair of the NTSA Communications Committee.
Opinions expressed are those of the author, and do not necessarily reflect the views of NTSA or its members.