PLR 200450052: Illness supports waiver of missed IRA rollover deadline

Plain-English summary

An IRA owner withdrew funds intending to roll them into another IRA, but missed the 60 day deadline after illnesses interfered. He said the funds remained in a savings account and requested a waiver shortly after discovering the missed deadline. The IRS waived the deadline under § 408(d)(3)(I) and gave him 60 days from the ruling date to contribute the amount to an IRA, provided the other rollover requirements are met. The ruling does not authorize rollover of any required minimum distribution and assumes the original IRA qualifies under § 408.

Ruling snapshot

• Question: May the taxpayer complete an IRA rollover after illness caused him to miss the 60 day deadline?
• Outcome: Approved, subject to the other rollover requirements.
• Key authorities: IRC §§ 408(d)(3)(I), 401(a)(9); Rev. Proc. 2003-16.

Full text (IRS public release)

200450052
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
SEP 16 2004
U.I.L. 408.03-00

Legend:
Taxpayer A = **
IRA X = **
Bank B = **
Amount D = **
Account C = **
Bank F = **

Dear ***:

This is in response to your letter dated August 23, 2004, as supplemented by correspondence dated September 10, 2004, and September 15, 2004, 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 penalties of perjury in support of your request.

Taxpayer A, who is [illegible] years old, maintained an individual retirement arrangement, IRA X, with Bank B. On [illegible], Taxpayer A withdrew Amount D from IRA X with intent to roll it over to another IRA within 60 days. On
[illegible], Taxpayer A deposited Amount D into Account C, a savings account he maintains at Bank F. Taxpayer A asserts that it was his intention to leave Amount D in Account C and roll it over to another IRA before the expiration

2
200450052

of the 60-day rollover period. The 60-day rollover period expired on [illegible].

Taxpayer A asserts that illnesses prevented him for completing the rollover within 60 days. Taxpayer A filed his request for a waiver of the 60-day rollover period shortly after discovering that he had missed the 60-day rollover period. Taxpayer A asserts that he has not used Amount D and that Amount D continues to be held in Account C. Taxpayer A also submitted a copy of the most recent account statement for Account D which shows a balance far in excess of Amount D.

Based upon the foregoing facts and representations, you request that the Service waive the 60 day rollover requirement with respect to the distribution of Amount D from IRA X.

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)(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 received the payment or distribution; or

(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 the time during the 1-year period ending in 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 included in gross income because of the application of section 408(d)(3).

3
200450052

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 section 408(d)(3)(A) and 408(d)(3)(D) of the Code where the failure to waive such requirement would be against equity and good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement. Only distributions that occur 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, or hospitalization, incarceration, restrictions imposed by a foreign country or postal error; (3) the use of 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 submitted in this case indicates that Taxpayer A received distribution in the amount of Amount D from IRA X on [illegible] as supported by the statement for IRA X. Further, documentation submitted by Taxpayer A indicates that Amount D was deposited into Account C on
[illegible]. Taxpayer A states that it was his intention to rollover Amount D to another IRA by [illegible], but failed to complete the rollover by that date because of his medical condition. Taxpayer A asserts that he has not used Amount D since it has been in Account C and that this amount continues to be held in Account C.

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 D from IRA X. Taxpayer is granted a period of 60 days from the date of this ruling to contribute Amount D to an IRA. Provided all other requirements of section 408(d)(3) of the Code, except the 60-day requirement, are met with respect to such contribution, Amount D will be considered rollover contribution within the meaning of section 408(d)(3) of the Code.

This ruling does not authorize the rollover of amounts that are required to be distributed to Taxpayer A by section 401(a)(9) of the Code.

This ruling assumes that IRA X satisfies the qualification requirements of Code section 408 at all times relevant to this transaction.

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

4
200450052

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent.

If you have any questions concerning this ruling, please contact
****SE:T:EP:RA:T2.

Sincerely yours,

(signed) JOYCE E. FLOYD
Joyce E. Floyd, Manager
Employee Plans Technical Group 2

Enclosures:

Deleted copy of letter ruling
Notice 437