Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

which do not produce the expected benefits even though…these choices were the result of erroneous advice” by the financial consultant. (The IRS mentions that the erroneous advice was “not in connection with the rollover itself,” implying that erroneous tax advice about the rollover itself might be grounds for a waiver.) But in PLRs 2006-09019 and 009-25047 the IRS granted waivers to widows who were told (incorrectly) by their advisors that distributions from their deceased husband’s retirement plans were tax-free. What’s the difference? The IRS mentions the widow’s depression in PLR 2009-25047; is the IRS saying that it is reasonable to rely on professional tax advice only if you are mentally ill? G. Waiver denied: Taxpayer’s own mistake. The most insidious trend in IRS waivers is that they will not grant the waiver if the taxpayer himself made a mistake that caused the rollover deadline to be missed (and the taxpayer was not incapacitated). For example, a taxpayer who thought she had 60 business days rather than 60 calendar days to complete the rollover did not get a waiver. PLR 2014-49009. The taxpayer who gave her IRA distribution check to her husband to reinvest without telling him it was an IRA did not get a waiver. PLR 2014-18063. The taxpayer who requested a distribution to himself of his entire qualified plan balance, rather than a direct rollover to an IRA, thereby triggering mandatory income tax withholding (which he was informed about) was not granted a waiver to allow him to wait until he got the withheld taxes refunded to complete rollover of the withheld portion. PLR 2014-19026. Taxpayer who accidentally endorsed his intended rollover check to the wrong account did not get a waiver. PLR 2010-02049. And neither did any of the following: Participant forgot his 10-years-old annuity was an IRA, so mistakenly reinvested in a taxable account. PLR 2010-03030. Taxpayer trying to consolidate his accounts did not understand IRA rules. PLR 2010-06035. Participant erroneously assumed that oral instructions to the financial institution were sufficient to accomplish a rollover. PLR 2010-07080. Taxpayer invested IRA distribution in “Company C,” intending it to be an IRA investment, but without seeking professional assistance. PLR 2010-15039. Participant withdrew from an IRA and reinvested in a bank CD without taking proper steps to confirm the account was an IRA. PLR 2010-37038. In the early days some waiver requests were granted where the taxpayer really didn’t have much of an excuse ( e.g. , taxpayer waited until the 58 th day, then found the bank was closed for a long holiday weekend so she couldn’t deposit the check; PLR 2004-11052). But more recently, the IRS has denied waivers for such “flimsy” excuses as: participant was overworked because he had to drive his child to camp each day (2007-30024); participant’s minor surgery (2007-51032); participant’s father’s sudden cancer diagnosis and death (2008-29030); and participant’s agitated thinking due to his sister’s financial crisis (2010-02049). H. Evolving and inconsistent IRS standards. The IRS has grown more restrictive over the years when it comes to granting hardship waivers.