A. There are three solutions: an automatic hardship waiver, a PLR, and self-certification.
1) Automatic Hardship WaiverThe automatic hardship waiver is a free way to immediately salvage a late rollover. Note that there is a strict deadline for this fix. Under Rev. Proc. 2003-16, an automatic waiver is granted when the following two conditions are BOTH met:
(1) The funds are deposited into an eligible retirement plan within one year from the date the distribution was received.
(2) The rollover would have been a valid rollover if the financial institution had deposited the funds as instructed.
2) PLR
A PLR is a written statement issued to a taxpayer in which the IRS applies tax laws to a particular set of facts represented by the taxpayer. In Rev. Proc. 2003-16, the IRS allowed taxpayers to apply for a waiver of the 60-day rule by requesting a PLR, and hundreds of taxpayers have taken advantage of that opportunity.
But PLR requests are expensive — the IRS user fee is $10,000 and professional fees can add thousands of dollars more. They are also slow — a ruling can take as long as nine months. Even then, there is no guarantee of success. For example, the IRS will typically not issue a PLR for a late rollover if the taxpayer uses the IRS funds as a “60-day loan.” This may explain why Burack did not request a PLR.
3) Self-Certification
If you missed the 60-day rollover deadline, you can obtain relief through self-certification under Rev. Proc. 2016-47 — a cheaper and faster alternative to a PLR. An individual can use self-certification only if the late rollover was for one or more of the 11 reasons specified in the Revenue Procedure.
The most important thing is this: Using a direct transfer instead of a 60-day rollover so you don't have to worry about complying with all of the strict IRS rules or about fixing the rollover if those rules aren’t complied with.