PLR 201026042: IRS waived the 60-day rollover deadline after a family death

Plain-English summary

The IRS waived the 60-day rollover requirement for an individual who moved funds from an IRA to a non-IRA account and then missed the rollover deadline after learning that a family member had died abroad. The taxpayer traveled to the funeral and contacted the financial institution two days after the deadline. The IRS granted 60 additional days to contribute the amount to a rollover IRA, provided the other rollover requirements were met. The ruling did not address the tax treatment of the transaction under other Code or regulatory provisions.

Ruling snapshot

• Question: Could the IRS waive the 60-day IRA rollover deadline when a family death prevented a timely rollover?
• Outcome: approved
• Key authorities: IRC §§ 72, 401(a)(9), and 408(d)(1), 408(d)(3), and 408(d)(3)(I); Rev. Proc. 2003-16; IRC § 6110(k)(3)

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE 201026042
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

WASHINGTON, D.C. 20224

APR 06 2010

Uniform Issue List: 408.03-00

SE: T: EP: RA: T1

Legend:

Taxpayer A = ***
IRA B = *
Financial Institution C = *
Account D = *
Financial Institution E = *
Amount 1 = ****

Dear ***:

This is in response to your request dated **, as supplemented by communication dated **, 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 represents that he received a net distribution totaling Amount 1 from IRA B maintained with Financial Institution C. Taxpayer A asserts that his failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3) was due to the death of his family member within the 60-day period.

Taxpayer A maintained IRA B, an individual retirement account under section 408(a) of the Code, with Financial Institution C. On **, Taxpayer A transferred Amount 1 from IRA B to non-IRA Account D with Financial Institution E. Following the transfer, Taxpayer A began working abroad and intended to return the funds to a qualified account within the 60-day period. On **, during the 60-day period, Taxpayer A received word that his brother had died in another country.

2 201026042

Taxpayer A traveled to his brother's funeral and two days following the expiration of the 60-day period, Taxpayer A contacted Financial Institution C to return the funds to IRA B. Taxpayer A was informed by representatives of Financial Institution C that he could not return the funds outside of the 60-day period without a ruling from the Internal Revenue Service (“Service.”)

Based on the above facts and representations, you request a ruling that the Service waive the 60-day rollover requirement with respect to Amount 1 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 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) of the Code, 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.

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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 the death of a member of Taxpayer A’s family during the 60-day period.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service hereby waives the 60-day rollover requirement under section 408(d)(3)(A) with respect to Amount

1. Taxpayer A is granted a period of 60 days from the issuance of this ruling letter to
   contribute Amount 1 to 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 1 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.

If you wish to inquire about this ruling, please contact ** (Identification Number **) at () -*. Please address all correspondence to
*****.

Sincerely yours,

[illegible]

Carlton A. Watkins, Manager,
Employee Plans Technical Group 1