PLR 200911046: Caring for an ill parent justified a late IRA rollover

Plain-English summary

An IRA owner took a distribution while changing investment vehicles. During the 60-day rollover period, he traveled to another state to care for his seriously ill mother and manage her business affairs while she underwent heart surgery. He transferred the distribution to a new IRA shortly after the deadline. The IRS accepted that his travel and caregiving responsibilities caused the delay and waived the 60-day requirement under section 408(d)(3)(I). He received 60 days from the ruling's issuance to contribute the amount to a rollover IRA, provided that all other rollover requirements were met.

Ruling snapshot

• Question: Could the taxpayer receive a waiver of the 60-day IRA rollover deadline after caring for his seriously ill mother during the rollover period?
• Outcome: Approved: the taxpayer received 60 days from the ruling's issuance to complete the rollover.
• Key authorities: IRC §§ 72 and 408(d)(3); Rev. Proc. 2003-16.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY 200911046

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

DEC 16 2008

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00

SE:T:EP:RA:T1
Re: Control Number:
Legend:

Taxpayer =

IRA A =

Financial Institution B =

IRA Account C =

Financial Institution D =

Individual E =

State F =

State G =

Amount 1 =

Dear :

This is in response to a request for a private letter ruling dated December 31, 2007, as supplemented by additional correspondence dated June 26, and August 26, 2008, in which you have applied for a waiver of the 60-day rollover requirement contained in section 408(d)(3) of the Internal Revenue Code ("Code"), regarding the distribution of Amount 1 from your individual retirement account (IRA A) maintained with Financial Institution B.

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

Taxpayer, age 55, represents that on June 6, 2007, he liquidated IRA A and took a distribution of Amount 1. He wanted to change investment vehicles to obtain a higher rate of return. Taxpayer 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 traveling to care for his mother during her illness and to manage her business affairs during the 60-day rollover period.

On July 8, 2007, Taxpayer was informed his mother (Individual E) was seriously ill. Taxpayer traveled from State F to State G to help care for her. Due to a deteriorating condition, Individual E required heart valve replacement surgery. During his stay in State G, Taxpayer spent his entire day either with his mother at the hospital or managing her business. Upon returning home to State F, Taxpayer transferred Amount 1 to IRA Account C maintained with Financial Institution D. Such transfer occurred within days of the expiration of the 60-day rollover period.

Based on the above facts and representations, you request that the Internal Revenue Service ("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 is consistent with his assertion that his failure to accomplish a timely rollover of Amount 1 was due to his traveling to care for his mother during her illness and manage her business affairs for almost 30 days.

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 A. Taxpayer is granted a period of 60 days from the issuance of this letter ruling to contribute Amount 1 into a rollover IRA. Provided all other requirements of section 408(d)(3), except the 60-day requirement, are met with respect to such contribution, Amount 1 will be considered a rollover contribution within the meaning of section 408(d)(3).

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 , , (I.D. # ), at .

Sincerely yours,

Carlton A. Watkins
Manager
Employee Plans Technical Group 1

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