PLR 200634031: IRS waives an IRA rollover deadline after a holiday closing

Plain-English summary

An IRA owner tried to return a distribution before the 60 day rollover deadline but said the account company closed early for a holiday. Her husband made a deposit on the next business day. The IRS waived the deadline for the distributed Amount C and allowed 60 days from the ruling letter to contribute it to a rollover IRA, provided the other rollover requirements were met. The letter calls the next-day deposit Amount D in its facts and request, while its conclusion grants relief for Amount C. It also lists a 2004 distribution date alongside 2005 dates for the attempted redeposit; those details appear as printed in the IRS release.

Ruling snapshot

• Question: Could the IRA owner receive a waiver of the 60 day rollover deadline after the company's holiday closing?
• Outcome: Waiver granted for Amount C, subject to the other rollover requirements.
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
200634031
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
APR 10 2006
T:EP:RA:T3
Uniform Issue List: 408.03-00

Legend:
Company A =
Bank B =
Amount C =
Individual E =
Date M =
Date N =
Date P =
Date Q =
IRA X =

Dear

This is in response to your request dated September 12, 2005, 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”).

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

You maintained IRA X with Company A. On Date M, 2004, you requested that Company A distribute Amount C from IRA X, with such funds being wired to Bank B.

During the week of Date N, 2005, your father-in-law was hospitalized and required extensive surgery. You were extremely worried about his health and were under significant emotional stress. The 60 day period ended on Date Q, a Sunday. You attempted to rollover the funds on Date P, 2005, a Friday, but were unable to return the funds on such date due to the early closing of Company A for the Martin Luther King holiday. On Date R, 2005, the next business day after the 60 day period expired, Individual E, your husband, deposited Amount D into IRA X for you. You received a 1099-R in 2005 from Company A and your accountant informed you that Amount C had been reported as a taxable distribution.

Based on the facts and representations, you request a ruling that the Internal Revenue Service waive the 60 day rollover requirement, with respect to Amount D, contained in section 408(d)(3) of the Code in this instance.

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 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

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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 (January 27, 2003) 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 you demonstrates a failure on your part to accomplish the intended rollover because Company A was closed on the 60th day. Further, you attempted to redeposit Amount C into her IRA on the next business day after the expiration of the 60-day period.

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 C from IRA X. Taxpayer A is granted a period of 60 days from the issuance of this ruling letter to contribute Amount C into a rollover 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, the contribution of Amount C into an IRA 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.

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

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

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If you wish to inquire about this ruling, please contact *** (ID -*) at (202) . Please address all correspondence to SE:T:EP:RA:T:3

Sincerely yours,

[signature]

Frances V. Sloan, Manager,
Employee Plans Technical Group 3

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

CC: