A financial professional’s bad advice was grounds to waive the 60-day IRA rollover rule, IRS stated privately. At retirement, a couple transferred their 401(k) balances into IRAs.
Their financial adviser stated that they should take the amounts in their IRAs and roll them back into their former employer’s plan because IRAs are not exempt from bankruptcy creditors. This is incorrect, they are exempt from bankruptcy creditors.
After tapping their IRAs, they learned they were ineligible to make rollovers because they no longer were plan participants.
By the time they tried to return the money to their IRAs, the 60-day rollover period had lapsed. The IRS gave them extra time since their failure was due to bad advice.