Relief for Late Rollovers

The IRS has issued new guidance that will help some taxpayers avoid taxes and penalties on rollovers of distributions from employer-sponsored retirement plans that aren’t completed within 60 days. The new guidance allows taxpayers who miss the deadline for any one of 11 specified reasons to correct the error by sending the IRS’s model certification letter (or one substantially similar to it) to the receiving plan trustee. The taxpayer must complete the rollover “as soon as practicable” — usually within 30 days — after the reason for the delay ceased to apply.

IRS Makes Changes to EPCRS

The IRS has updated the Employee Plans Compliance Resolution System (EPCRS) to account for changes in the determination letter application program and to incorporate certain other modifications outlined in previous IRS guidance. Among other updates, Revenue Procedure 2016-51 provides that determination letters may no longer be submitted with Voluntary Correction Program (VCP) submissions. Additionally, VCP user fees will be published in the annual Employee Plans revenue procedure that sets forth user fees, although the IRS reserves the right to impose a sanction higher than the VCP user fee for the correction of “egregious” failures.

Mutual Fund Ownership

An estimated 91 million individual investors owned mutual funds in mid-2015, based on data compiled by the Investment Company Institute in its 2016 Investment Company Fact Book. At year-end, these investors held 89% of total mutual fund assets directly or through retirement plans. Mutual fund ownership by U.S. households in 2015 declined slightly from the prior year, from 43.3% to 43% (about 53.6 million households). The authors of the Fact Book noted that 91% of mutual fund investors are investing for retirement while 50% are saving for emergencies.