The Internal Revenue Service (IRS) has announced that the federal income tax filing deadline for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. This extension also applies to 2020 IRA contributions. This notice provides operational guidelines for processing 2020 IRA contributions received after April 15, 2021 through May 17, 2021.
Note: This extension does not impact the disaster area tax relief extensions announced by the IRS for residents of Louisiana, Oklahoma and Texas. The tax filing deadline for these states has been extended to June 15, 2021. See Important Notices 21-70 and 21-97 for more information.
IRA Contributions via Check
To ensure that prior year contribution (PYC) checks are in good order and meet the 2020 contribution deadline, the envelope in which the contribution check is received must be postmarked on or before May 17, 2021. Correspondents have the system capability to book PYCs via Mainframe BCOW until May 20, 2021. The deadline for processing PYCs via both Bank Distributed Local Check Deposits and Remote Check Deposit is May 17, 2021. National Financial Services LLC (NFS) may request to see copies of postmarked envelopes for any checks deposited from May 17, 2021 through May 20, 2021 as PYC via Mainframe BCOW.
To prove the check was mailed on or before the contribution deadline, retain the customer’s postmarked envelope or a copy of the postmarked envelope in which the contribution check was received. The envelope must be addressed to NFS or the Home
Office and clearly postmarked on or before May 17, 2021. A USPS metered mail stamp must be dated on or before May 17, 2021. The date on a ‘forever stamp’ is merely the date it was purchased and cannot be used as the postmark date. A prepaid business reply envelope without a postmark does not provide the necessary proof of mail date.
Important: PYC checks received after May 17, 2021, without proof they were mailed on or before May 17, 2021, will not be processed. They will follow the existing workflow for checks received not in good order (NIGO).
If you receive hand delivered contribution checks directly from your customers and forward the checks to NFS for deposit, you will need to maintain evidence that the checks were mailed to NFS by your firm on or before May 17, 2021. For overnight mail, obtain a receipt from the overnight vendor showing delivery information and date sent to NFS. NFS cannot code an IRA contribution check as a PYC after May 17, 2021 unless the envelope is postmarked on or before May 17, 2021.
Checks deposited by your firm after May 20, 2021 and postmarked on or before May 17, 2021 must be booked as current year contributions (CYC). To correct coding and facilitate timely and orderly review, correspondents should enter a Service Request via WealthscapeSM Service Center using Retirement Contributions/Distributions>Contribution Correction:
- In the Memo Field enter: “CYC to PYC.” Enter the date and amount of deposit in the appropriate fields and in the description field, describe the facts supporting the correction.
- Attach a copy of the envelope in which the IRA contribution check was received, displaying the postmark on or before May 17, 2021. Correspondents should keep the envelope for their own records.
- Attach a copy of the IRA contribution check with the appropriate tax year clearly designated in the memo section of the check or other documentation provided by the customer clearly indicating the appropriate tax year.
When properly documented requests are received, NFS will adjust the entry made by your firm from CYC to PYC, which will automatically update the tax records.
IRA Contributions via Remote & Mobile Check Deposit
Checks reviewed and approved by 6:00 p.m. ET on May 17, 2021 can be coded as PYC. Checks reviewed and approvedafter 6:00 ET on May 17, 2021 must be entered as CYC. If the deposit is for a PYC, be sure to write “PYC” or “2020contribution” on the check and enter a Service Request as described above.
IRA Contributions via (EFT)
Contributions made via Periodic Investment Plans (PIP) after January 1, 2021 using Electronic Funds Transfer (EFT) will be coded as CYC. For EFT contributions made between January 1, 2021 and May 17, 2021 that were intended as PYC, please enter a Service Request using Retirement Contributions/Distributions >Contribution Correction. In the description field, enter the contribution date(s) and amount(s) to be changed to a PYC.
For contributions via EFT which are not part of a PIP, the request must be loaded on the Integrated Cashiering Platform (ICP) by 11:59 p.m. ET on May 17, 2021.
IRA Contributions via IBP
2020 IRA contributions via Intra-Bank Payment (IBP) (for bank correspondents only), must be made by 11:59 p.m. ET on May 17, 2021.
IRA Contributions via Bank Wire
2020 IRA contributions via Bank Wire must be received by the May 17, 2021 tax filing deadline. The incoming wire instructions should note that the Bank Wire is for a 2020 contribution. If there are no wire instructions, NFS will process the contribution as a CYC if within the customer’s contribution limit.
IRA Contributions via Journals from NonRetirement Accounts
Cash contributions via a journal transfer from non-retirement accounts to fund PYCs must be loaded in ICP by 11:59 p.m. ET on May 17, 2021. NFS will process manual journal transfer requests received in good order by 11:59 p.m. on May 17, 2021. All requests to fund IRA contributions from non-retirement accounts must be processed from the customer’s core account. For contribution journals which cannot be processed via ICP or BJNL that require NFS support, please submit a Service Request under Retirement Contributions/Distributions>Contribution from a non-retirement account.
Requests to process PYC journal transfers after May 17, 2021 may be accepted with proof the instructions were submitted to the Home Office on or before May 17. Proof can include a customer signed instruction loaded to BPM or Service Center with a system time stamp prior to the deadline. Transfers that qualify will not be back dated but will be processed current day and coded as PYC. The May 17, 2021 contribution deadline applies to all journal requests. The postmarked envelope rule also applies to mailed journal requests.
Online Adjustments
The Brokerage Online Adjustments system (BOLA) should not be used to adjust PYC deposits made after May 17, 2021.These requests should be submitted via a Service Request using Retirement Contributions/Distributions > Contribution Correction.
For CYC to PYC adjustments of deposits posted prior to the tax filing deadline, BOLA may be used. When submitting “Reversed Check Received” and “As of Check Received” adjustments to correct a CYC to a PYC or vice versa, the requestor must enter “ADJ in good order” to the comment field in order for the request to be approved. By entering an adjustment request, the correspondent agrees that:
- The adjustment is in good order.
- The adjustment is processed in accordance with established policies and procedures.
- The correspondent will keep the account owner’s supporting documentation in their records.
NFS reserves the right to and will periodically request backup copies of the supporting documentation for these adjustments. Appropriate documentation may include a copy of the check with the appropriate year, or a letter of instruction from the account owner. If appropriate documentation is not provided, the adjustment will be reversed. It is the responsibility of the correspondent to maintain proof of the client’s intent and to provide it to NFS in a timely manner, generally within 5 business days, upon request.
For more information refer to IR-2021-59 and IR-2021-67.
TC120380(0421)1