PLR 200634055: Sunday rollover deadline qualifies for an IRA extension

Plain-English summary

A taxpayer planned to roll part of an IRA withdrawal into another IRA, but the 60th day fell on a Sunday when the receiving credit union was closed. The taxpayer attempted the deposit on the next business day, and the credit union rejected it as late. The IRS waived the deadline for the amount intended for rollover and allowed 60 days from the ruling letter to contribute it to a rollover IRA. The ruling required the other rollover rules to be met and did not permit a rollover of required minimum distributions.

Ruling snapshot

• Question: Does a closed credit union on the 60th day justify extending the IRA rollover deadline?
• Outcome: Approved for the intended rollover amount, subject to the other rollover rules.
• Key authorities: IRC §§ 408(d)(3)(I), 401(a)(9); Rev. Proc. 2003-16.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE

WASHINGTON, D.C. 20224
200634055

TAX EXEMPT AND
GOVERNMENT ENTITIES

DIVISION
MAY 16 2006

T:EP:RA:T4

Uniform Issue List: 408.03-00

Legend:

Taxpayer A
Credit Union B
Credit Union C
Amount D
Amount E
Amount F
Date G

Date H

Date I

Date J

IRA X

This is in response to your ruling request dated , in which you request a waiver of the 60-day rollover requirement 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:

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Taxpayer A, age ** , represents that on Date G Taxpayer A received a distribution from Credit Union C of Amount D from IRA X. Taxpayer A intended to make use of (and therefore pay taxes on) a portion of the distribution, Amount E, and roll over the remainder, Amount F, into a rollover IRA with Credit Union B within the 60-day rollover period. However, the 60-day period ended on Date H, a Sunday. Taxpayer A attempted to rollover Amount F into a rollover IRA with Credit Union B on Date I, one day after the expiration of the 60-day period. On Date J

Credit Union B notified Taxpayer A that they would not accept Amount F as a rollover because the 60-day rollover period had expired. Taxpayer A further represents that on Date J Amount F was deposited into a non-IRA account with Credit Union B where it remains and has not been used for any other purpose.

Based on the above facts and representations, you request that the Service waive the 60-day rollover requirement with respect to the distribution of Amount F.

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)(E) of the Code provides that the rollover provisions of section 408(d) do not apply to any amount required to be distributed under section 408(a)(6).

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 or 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 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).

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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 of the Treasury may waive the 60-day requirement under sections 408(d)(3)(A) and (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.

Revenue Procedure 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 demonstrates a failure on your part to accomplish the intended rollover because Credit Union B was closed on the 60th day. Further, you attempted to redeposit Amount F into a rollover 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 F.

You are granted a period of 60 days from the issuance of this ruling letter to contribute Amount F into a rollover IRA. Provided all other requirements of section 408(d)(3) of the Code, except the 60-day rollover requirement, are met with respect to such contribution, Amount F will be considered a 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 by section 401(a)(9) 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 that may be applicable hereto.

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

If you have any questions regarding this ruling, you may contact

Sincerely yours,
[illegible]
Donzell Littlejohn, Manager
Employee Plans Technical Group 4

Enclosures:

Notice of Intention to Disclose
Deleted copy of this letter