PLR 200752045: IRS waives IRA rollover deadline after agent's hospitalization

Plain-English summary

An 82-year-old woman acting under a power of attorney for her husband received a distribution from his IRA. Her hospitalization and medical treatment prevented her from rolling over the unused portion within 60 days. She tried to deposit that portion 12 days after the deadline, but her bank refused it. The IRS waived the deadline for that unused portion under § 408(d)(3)(I) and allowed 60 days from the letter to contribute it to a rollover IRA. The ruling did not permit a rollover of required minimum distributions. Its final sentence calls the entire distribution a rollover contribution, although the waiver and permitted contribution expressly concern only the unused portion.

Ruling snapshot

• Question: Could the unused portion of an IRA distribution be rolled over after the 60-day deadline because the recipient's agent was hospitalized?
• Outcome: Approved: the IRS waived the deadline for the unused portion, subject to a new 60-day contribution period and other rollover requirements.
• Key authorities: IRC §§ 408(d)(3), 401(a)(9); Rev. Proc. 2003-16.

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

200752045
OCT - 2 2007
T:EP:RA:T3

Uniform Issue List: 408.03-00

Legend:

Taxpayer A =
Taxpayer B =
IRA X =
Amount A =
Amount B =
Amount C =
Date 1 =

Dear

This is in response to your request dated April 9, 2007, and as supplemented by a letter dated September 14, 2007, in which you request a waiver of the 60-day rollover requirement contained in section 408(d)(3) of the Internal Revenue Code

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

Taxpayer A, age 82, represents that acting under a durable power of attorney for her husband, Taxpayer B, she received a distribution from IRA X totaling Amount A. Taxpayer A asserts that her failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3) was due to her medical condition and the treatment she was receiving which included her hospitalization during the 60 day rollover period which impaired her ability to accomplish a timely rollover.

Taxpayer A received a distribution from IRA X totaling Amount A on Date 1 2006. That same day Taxpayer A was hospitalized and remained either hospitalized, without transportation, or in therapy for approximately 33 days. During the 60-

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day rollover period, it was necessary for Taxpayer A to receive constant medical and nursing care and to arrange for medical transportation for her medical treatments. During this period, Amount B of Amount A was used to pay for Taxpayer B’s care. Taxpayer A attempted to rollover Amount C (Amount A less Amount B) twelve days after the expiration of the 60-day rollover period but was refused by her bank because she had missed the 60-day rollover period. Taxpayer A has submitted medical records documentation consistent with her representations.

Based on the facts and representations, with respect to Amount C, you request a ruling that the Internal Revenue Service waive the 60-day rollover requirement 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 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.

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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)(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 documentation submitted by Taxpayer A is consistent with her assertion that her failure to accomplish a timely rollover was caused by her medical condition and the treatment she was receiving which included her hospitalization during the 60 day rollover period which impaired her ability to accomplish a timely rollover.

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, Amount A 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 which may be applicable thereto.

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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.

If you wish to inquire about this ruling, please contact , at
Please address all correspondence to
.

Sincerely yours,

Frances V. Sloan, Manager
Employee Plans Technical Group 3

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