Earlier today I posted on how the IRS is charging much higher amounts than in past years for private-letter rulings. Here are the gory details:
In its January announcement, the IRS noted that the "dollar amounts for various user fees have been increased to more accurately reflect costs to [use] the service." In plain English: You used to be able to get a private-letter ruling fairly cheaply, but not any more. An average ruling that would have cost you $650 last year will run you $9,000 beginning in February.
In the earlier post I didn't include their comment on the #1 mistake that people make and thus force them to request a private-letter ruling:
One of the most common mistakes where taxpayers wind up needing a private ruling involves withdrawing money from a 401(k) with the intention of moving it to an IRA. The transfer must be completed within 60 days, but sometimes isn't; in some cases. the money is simply moved to the wrong account, a blunder which turns the entire transfer into a taxable distribution.
I've always done a direct rollover of my 401k -- and done it quickly -- whenever I've moved from one job to another. Since I put the full amount in my 401k, it's usually a decent amount of money and I don't want it in anyone's hands other than mine. I'm not sure why someone would wait over 60 days to make the transfer. Do they just forget?
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