PLR 1025085: IRS waived the 60-day IRA rollover requirement after a medical delay

Plain-English summary

The IRS waived the 60-day deadline for a taxpayer who withdrew money from an IRA and deposited it into a non-IRA savings account while intending to complete a rollover. The taxpayer said a medical condition impaired the ability to complete the rollover, and the financial institution refused the attempted rollover because the deadline had passed by one day. The IRS granted 60 days from the issuance of the ruling letter to contribute the amount to a rollover IRA, provided the other rollover requirements were met. The waiver was issued under IRC § 408(d)(3)(I), which allows relief when enforcing the deadline would be against equity or good conscience.

Ruling snapshot

• Question: Could the IRS waive the 60-day IRA rollover requirement because a medical condition delayed the taxpayer's rollover?
• Outcome: approved
• Key authorities: IRC §§ 72, 408(d)(1), 408(d)(3), and 408(d)(3)(I); Rev. Proc. 2003-16; IRC § 6110(k)(3)

Full text (IRS public release)

201025085

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAR 30 2010

UIL No. 408.03-00

[illegible routing notation]

Legend:
Taxpayer A =
IRA X =
Financial Institution B =
Amount A =
Account C =
Date 1 =
Date 2 =
Date 3 =

Dear :

This is in response to your letter dated , supplemented by letters
dated , and , 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”).

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

Taxpayer A, age 64, represents that, on Date 1, concerned by the decline
in the stock market, he requested a withdrawal of Amount A from IRA X.
Taxpayer A received Amount A on Date 2. Taxpayer A represents that he
intended to rollover the withdrawn funds into another IRA. On Date 2, Taxpayer A
deposited Amount A with Financial Institution B in Account C, a non-IRA savings

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account, intending to transfer Amount A into an IRA within the 60-day period.
Taxpayer A asserts that his failure to accomplish a rollover of Amount A within
the 60-day period prescribed by section 408(d)(3) of the Code was due to his
medical condition which impaired his ability to accomplish a timely rollover.

Taxpayer A represents that he was suffering from an illness during the last
few days of the 60-day period and attempted to complete the rollover on Date 3
but employees of Financial Institution B refused his request to do so, informing
him that he had exceeded the 60-day period by one day. Amount A currently
remains in Account C.

Based on these facts and representations, you request a ruling that the
Internal Revenue Service (“the Service”) waive the 60-day rollover requirement
with respect to the distribution of Amount A.

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 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 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.

Revenue Procedure 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 his assertion that his failure to accomplish a timely rollover was
due to his medical condition, which impaired his 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 A from IRA X. Taxpayer A is granted a period of 60 days from the
issuance of this ruling letter to contribute Amount A 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.

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.

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

Sincerely yours,

[handwritten signature] for Ada Perry
Laura B. Warshawsky, Manager
Employee Plans Technical Group 4

Enclosures:
Deleted Copy of Ruling Letter
Notice of Intention to Disclose