PLR 1025089: IRS waived the 60-day IRA rollover requirement

Plain-English summary

The IRS waived the 60-day rollover requirement for an individual who received a distribution from an IRA but had the funds deposited into a non-IRA account because of a financial institution employee's mistake. The individual had intended to transfer the funds to another IRA, did not use the money for another purpose, and did not discover the error until after the 60-day period expired. The IRS gave the individual 60 days from the ruling's issuance to contribute the amount to a rollover IRA, subject to the other rollover requirements. If those requirements were met, the amount would be treated as a rollover contribution.

Ruling snapshot

• Question: Could the IRS waive the 60-day IRA rollover deadline after a financial institution mistakenly deposited the distribution into a non-IRA account?
• Outcome: approved
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16; IRC § 6110(k)(3)

Full text (IRS public release)

201025089

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

APR 2, 2010
501.03-00

Legend: [illegible]

Taxpayer A =

Financial Advisor L =

Individual M =

Financial Institution U =

Financial Institution V =

IRA X =

Account T =

Amount A =

Date 1 =

Date 2 =

Dear :

   This is in response to your request dated                 , as supplemented by

correspondence 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 49, represents that she received a distribution from IRA

X totaling Amount A on Date 2. Taxpayer A asserts that her failure to accomplish
a rollover within the 60-day period prescribed by section 408(d)(3) was due to a

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mistake made by Individual M, an employee of Financial Institution U. Taxpayer
A further represents that Amount A has not been used for any other purpose.

   Taxpayer A maintained IRA X at Financial Institution V. On Date 1, on the

advice of Financial Advisor L, Taxpayer A completed an Account Transfer Form
to transfer the funds in IRA X to an IRA at Financial Institution U. However,
because Financial Institution V did not have transfer facilities, that transfer form
could not be used. On Date 2, Taxpayer A again requested a rollover distribution
and received Amount A from IRA X. When Amount A was received by Financial
Institution U for deposit into a rollover IRA, Individual M, an assistant to Financial
Advisor L, placed Amount A in Account T, a non-IRA account. Taxpayer A did
not become aware that Amount A had been deposited into a non-IRA account
until after the 60-day rollover period had expired. Financial Institution U has
provided a letter acknowledging that Individual M deposited Amount A into
Account T in error.

   Based on the facts and representations, you request a ruling that the

Internal Revenue Service (the “Service”) waive the 60-day rollover requirement
with respect to Amount A contained in section 408(d)(3) of the Code.

   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

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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.

   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 her assertion that her failure to accomplish a timely rollover was
caused by a mistake made by Individual M, an employee of Financial Institution
U.

   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