New "SC" Code for IRA Rollover Self Certification

February 28, 2017

As promised, the IRS has released its revisions to Form 5498, IRA Contribution Information, to reflect the use of the self-certification procedure by a taxpayer for late IRA rollovers.

You may recall my blog post from September 2016 that discussed the August 24, 2016, release of Revenue Procedure 2016-47, which announced a taxpayer may self-certify the reason for submitting a late IRA rollover. In this Revenue Procedure, the IRS stated that changes to Form 5498 would soon follow, and those changes are now.

During December of 2016, the IRS released the "2017 Instructions for Forms 1099-R and 5498" to reflect the allowable changes for reporting a late rollover contribution.

Although an IRA trustee that accepts a rollover contribution after the 60-day deadline has always reported the postponed contribution in boxes 13a, 13b, and 13c of Form 5498, the instructions for the new form added “late rollover with self certification” as one of the reasons for the postponement. The new code to indicate the self-certification is “SC”. It should be noted that the new self-certification procedure is effective on August 24, 2016. However, unlike the 2017 version the instructions for the 2016 Form 5498 do not address late rollover contributions received in 2016.

As always, taxpayers should seek guidance from their personal tax advisors in submitting a late rollover and self-certifying the late contribution so that the specific situation is accurately relayed to the IRA trustee. If correctly reported, the taxpayer’s Form 5498 should reflect the SC code to identify the late rollover by self-certification, thus avoiding inadvertent taxation (subject to IRS audit) of the IRA distribution.

If you have questions, please contact the Retirement Strategies Group directly at (800) 722-2333, ext. 3939, or send an e-mail to RSG@PacificLife.com.


Attachments/Links:

Picture of Caroline Elrod

Caroline Elrod is a Retirement Strategies Consultant with the Retirement Solutions Division at Pacific Life. She brings several years of industry experience to her role that includes tax planning with insurance products. Caroline enjoys educating financial professionals on creative and practical solutions to business, estate and retirement planning concerns.

Pacific Life, its distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor or attorney.

Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.

Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. 

Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA) and an affiliate of Pacific Life & Annuity Company. Variable and fixed annuity products are available through licensed third parties.

No bank guarantee • Not a deposit • Not FDIC/NCUA insured • May lose value • Not insured by any federal government agency