PLR 200716028: Mother's death supports late IRA rollover waiver

Plain-English summary

A taxpayer withdrew funds from an IRA while changing his investments and put them into a checking account. His mother became seriously ill and died during the 60 day rollover period. After handling family and estate matters, he deposited the funds into a new IRA beyond the deadline. The IRS waived the deadline under section 408(d)(3)(I), finding that the death explained the delay. The deposit would count as a rollover if the other requirements of section 408(d)(3) were met.

Ruling snapshot

• Question: May the taxpayer's late IRA deposit qualify for a rollover after his mother's death?
• Outcome: Approved for the deadline waiver, subject to other rollover requirements.
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16.

Full text (IRS public release)

200716028
DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

JAN 18 2007

Uniform Issue List: 408.03-00

SE:T:EP:RA:T1

Legend:

Taxpayer A

IRA B

Bank C

Account D

State E

State F

IRA G

Financial Institution H

Amount 1

Dear :

This letter is in response to a request for a letter ruling dated January 30, 2006, as supplemented by correspondence dated September 7, 2006, from your authorized representative, in which you request a waiver of the 60-day rollover requirement contained in section 408(d)(3) of the Internal Revenue Code ("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 represents that he received a distribution from IRA B totaling Amount 1. Taxpayer A asserts that his failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3) was due to a death in his family within the 60-day period.

Taxpayer A, a resident of State E, represents that in early 2005, he decided to change the investment strategy of his IRA. On April 22, 2005, he received a distribution from IRA B in Amount 1. On April 26, 2005, while a decision was being made on future investments, Amount 1 was deposited into Account D, a joint checking account at Bank

C. Taxpayer A was informed on that his mother, a resident of State F, had become seriously ill. On May 17, 2005, Taxpayer A traveled to State F and his mother died on Over the next several weeks, Taxpayer A was involved

in family and estate issues and did not realize he had not completed his rollover until after the expiration of the 60-day period. On July 11, 2005, Taxpayer A deposited Amount 1 into IRA G with Financial Institution H.

Based on the above facts and representations, Taxpayer A requests that the Service waive the 60-day rollover requirement contained in Code section 408(d)(3) with respect to the distribution of Amount 1.

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)).

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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 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 and the documentation submitted by Taxpayer A is consistent with his assertion that his failure to accomplish a timely rollover was caused by the death of his mother within the 60-day period.

Therefore, pursuant to Code section 408(d)(3)(I), the Service hereby waives the 60-day rollover requirement with respect to the distribution of Amount 1 from IRA B. Provided all other requirements of section 408(d)(3) of the Code, except the 60-day requirement, are met, the deposit of Amount 1 into IRA G on July 11, 2005, 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 letter ruling has been sent to your authorized representative pursuant to a power of attorney on file in this office. If you wish to inquire about this ruling, please

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contact , SE:T:EP:RA:T1, at . Please address all
correspondence to SE:T:EP:RA:T1.

Sincerely yours,

Carlton A. Watkins

Carlton A. Watkins, Manager
Employee Plans Technical Group 1

Enclosures:
Deleted Copy of this Letter
Notice of Intention to Disclose, Notice 437

cc: