PLR 200406054: Snowstorm warrants one-day IRA rollover deadline waiver

Plain-English summary

An IRA owner withdrew cash to buy a condominium, changed her mind, and planned to put the money back into her IRA. A national holiday delayed her bank visit, and a major snowstorm made travel unsafe on the last day of the rollover period. When she reached the bank the following day, the deadline had passed by one day. The IRS found that the weather was beyond her control and waived the 60-day deadline under § 408(d)(3)(I). It gave her 60 days from the ruling letter to contribute the cash to the IRA if the other rollover requirements were met.

Ruling snapshot

• Question: Can severe weather justify waiving a one-day delay in completing an IRA rollover?
• Outcome: Approved a waiver and a new 60-day contribution period.
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16.

Full text (IRS public release)

200406054

INTERNAL REVENUE SERVICE

T:EP:RA:T4

NOV 13 2003

Uniform Issue List: 408.03-00

Legend:

Taxpayer A=

Amount B=

IRA C=

Dear [illegible]:

This is in response to your letter dated March 2, 2003, in which you request a waiver of the 60-day rollover requirement contained in section 408(d)(3) of the Internal Revenue Code (the Code).

The following facts and representations have been submitted under penalty of perjury in support of the ruling requested:

Taxpayer A is a [illegible] year old [illegible]. On December 18, 2002, Taxpayer A went to the bank where IRA C had been established and withdrew Amount B, in cash, from IRA C with the intention of using Amount B to purchase a condominium. Taxpayer A then changed her mind and decided against the original idea of purchasing the condominium. Taxpayer A intended to re-deposit the entire Amount B in IRA C.

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While Taxpayer A was preparing her 2002 tax return around February 15, 2003, Taxpayer A realized that she needed to rollover Amount B back into IRA C within the 60 day period allowed by the Internal Revenue Code (the Code) to avoid any adverse tax consequences.

Taxpayer A intended to go to the bank on February 17, 2003, to do the rollover but then realized that such day was a national holiday. ([illegible]). Taxpayer A still had one day left on the original 60 day rollover period and prepared to go to the bank the morning of February 18, 2003. However, on the morning of February 18, 2003, the State of Maine experienced a major snow blizzard that paralyzed the State and the northeast area. Those weather conditions made the trip to the bank impractical and unsafe with no guarantee that the bank was open. Finally, the next morning, February 19, 2003, Taxpayer A arrived at the bank to complete the rollover transaction. However, she was told that she could not do the rollover transaction to IRA C because the 60 day rollover period had expired by one day.

Taxpayer A proposes to redeposit Amount B to IRA C.

Taxpayer represents that no other amount was distributed from IRA C within the one year period since the original distribution.

Based on the above facts and representations, Taxpayer A requests that the Service waive the 60-day rollover requirement with respect to the distribution of Amount B because the failure to waive such requirement would be against equity or good conscience.

Section 408(d)(1) of the Code provides that, except as otherwise provided in section 408(d), any amount paid or distributed out of an IRA shall be included in gross income by the payee or distributee, as the case may be, in the manner provided under section 72 of the Code.

Section 408(d)(3) of the Code defines, and provides the rules applicable to IRA rollovers.

Section 408(d)(3)(A) of the Code provides that section 408(d)(1) of the Code does not apply to any amount paid or distributed out of an IRA to the individual for whose benefit the IRA is maintained if—

(i) the entire amount received (including money and any other property) is paid into an IRA for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution; or

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(ii) the entire amount received (including money and any other property) is paid into an eligible retirement plan (other than an IRA) for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received, except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is

includible in gross income (determined without regard to section 408(d)(3)).

Section 408(d)(3)(B) of the Code provides that section 408(d)(3) does not apply to any

amount described in section 408(d)(3)(A)(i) received by an individual from an IRA if at

any time during the 1-year period ending on the day of such receipt such individual received any other amount described in section 408(d)(3)(A)(i) from an IRA which was not includible in gross income because of the application of section 408(d)(3).

Section 408(d)(3)(D) of the Code provides a similar 60-day rollover period for partial rollovers.

Section 408(d)(3)(I) of the Code provides that the Secretary may waive the 60-day requirement under sections 408(d)(3)(A) and 408(d)(3)(D) of the Code where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement. Only distributions that occurred after December 31, 2001, are eligible for the waiver under section 408(d)(3)(I) of the Code.

Rev. Proc. 2003-16, 2003-4 I.R.B. 359, provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to section 408(d)(3)(I), the Service will consider all relevant facts and circumstances, including: (1) errors committed by a financial institution; (2) inability to complete a rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country or postal error; (3) the use of the amount distributed (for example, in the case of payment by check, whether the check was cashed); and (4) the time elapsed since the distribution occurred.

The information presented by Taxpayer A demonstrates that severe weather conditions beyond her control prevented Taxpayer A to satisfy the requirement that Amount B be deposited in IRA C within 60 days since the distribution. The failure to deposit Amount B into IRA C, by one day, within the 60-day period was beyond the reasonable control of Taxpayer A, and the failure to waive the 60-day requirement would be against equity or good conscience.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service hereby waives the 60-day rollover requirement with respect to the distribution of Amount B. Taxpayer A is granted a period of 60 days from the issuance of this ruling letter to contribute Amount

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B, in cash, into IRA C. Provided all other requirements of section 408(d)(3) of the Code, except the 60-day requirement, are met with respect to such contributions, these amounts will be considered rollover contributions within the meaning of section 408(d)(3) of the Code.

No opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the Code or regulations which may be applicable thereto.

This letter is directed only to the taxpayers who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

If you wish to inquire about this ruling, please contact [illegible], at [illegible]. Please address all correspondence to [illegible].

Sincerely yours,

Ada Perry
for Manager, Technical Group 4
Employee Plans

Enclosures:
Deleted copy of ruling letter
Notice of Intention to Disclose

Cc: