PLR 200602044: One-day-late IRA rollover allowed after incorrect deadline advice

Plain-English summary

An IRA owner asked a company representative when he had to redeposit an IRA distribution. The representative gave him a date one day beyond the actual 60-day deadline because the calculation overlooked May's 31st day. The owner relied on that advice and returned the full amount to his IRA on the stated date. The IRS waived the deadline under § 408(d)(3)(I), citing the inaccurate advice. His deposit would count as a rollover if the other rollover requirements were met.

Ruling snapshot

• Question: Could a one-day-late IRA redeposit qualify as a rollover when the owner relied on an incorrect deadline from a company representative?
• Outcome: Approved; the IRS waived the 60-day deadline.
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16.

Full text (IRS public release)

Uniform Issue List: 402.08-00

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

200602044

OCT 17 2005

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

SE:T:EP:RA:T4

Legend:

Individual A = **

Company M = *****

IRA X = ******

Amount D = $**

Date 1 = ***

Date 2 = **

Dear **:

This is in response to a request for a ruling dated September 13, 2005, in which your authorized representative requested 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:

Individual A, age **, represents that he received a distribution from IRA X totaling Amount D. Individual A asserts that his failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3) of the Code was due to his reliance on inaccurate information provided to him by a representative of Company M regarding the date on which the 60-day rollover period ended.

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On Date 1, Individual A received Amount D from IRA X. At that time Individual A was advised by a representative of Company M that in order to make a rollover of Amount D the 60-day rollover period would end on Date 2. Individual A redeposited Amount D into IRA X on Date 2. However, Date 2 was one day later than the 60-day rollover period. When calculating the 60-day period the representative of Company M failed to take into account that the month of May has 31 days. Individual A relied on the information provided by a representative of Company M which prevented him from rolling over Amount D within the 60-day rollover period.

Individual A had no rollover contributions during the previous year.

Based on the above facts and representations, Individual A requests a ruling that the Internal Revenue Service waive the 60-day rollover requirement contained in section 408(d)(3) of the Code with respect to Amount D.

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

(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 60" 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)).

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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 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 and documentation submitted by Individual A is consistent with his assertion that his failure to accomplish a timely rollover was caused by his reliance on inaccurate information provided to him by a representative of Company M regarding the last date for rolling over Amount D to IRA X.

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. Provided all other requirements of section 408(d)(3) of the Code (except the 60-day requirement) are met such contribution, which was made to IRA X on Date 2, will be considered a rollover contribution 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.

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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.

A copy of this letter has been sent to your authorized representative in accordance with a power of attorney on file in this office.

If you have any questions please contact * **, I.D.#* at () -***.

Sincerely yours,

[signature]

Donzell Littlejohn, Manager
Employee Plans Technical Group 4

Enclosures:
Deleted copy of this letter
Notice of Intention to Disclose, Notice 437