PLR 201038018: IRS waived the 60-day IRA rollover deadline

Plain-English summary

A taxpayer asked the IRS to waive the 60-day deadline for rolling an IRA distribution into another IRA. She had missed the deadline while serving as the full-time caregiver for her seriously ill elderly mother. The IRS granted the waiver under IRC § 408(d)(3)(I), allowing the later contribution to be treated as a rollover, provided the other rollover requirements were met. The ruling did not authorize a rollover of required minimum distributions.

Ruling snapshot

• Question: Could the taxpayer's late IRA contribution be treated as a timely rollover because serious illness and caregiving prevented completion within 60 days?
• Outcome: Approved
• Key authorities: IRC §§ 408(d)(3), 408(d)(3)(I), 408(a)(6), and 72

Full text (IRS public release)

TAX EXEMPT AND

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

201038018

GOVERNMENT ENTITIES

DIVISION

Uniform Issue List: 408.03-00

JUN 2 8 2010

Legend: SE:T:EP:RA:T3
Taxpayer A:

IRA X:

Financial Institution A:
Date 1:

Amount M:

Date 2:

IRA Y:

Dear

This is in response to your letters dated January 5, 2010, February 3, 2010, and May 26, 2010, submitted on your behalf by your authorized representative, 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 maintained an Individual Retirement Account (IRA), IRA X, with Financial Institution A. Taxpayer A asserts that on Date 1, Taxpayer A received a distribution of Amount M from IRA X. Taxpayer A asserts that her failure to accomplish a rollover of Amount M within the 60-day period prescribed by section 408(d)(3) of the Code was due to the serious medical illness of the Taxpayer's elderly mother for whom the Taxpayer was the principal caregiver and caretaker.

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On Date 1 Taxpayer A closed IRA X because she feared Financial Institution A’s investments would soon fail. Taxpayer A intended to rollover Amount M into a more secure FDIC protected account.

During the 60-day rollover period Taxpayer A’s 91 year-old mother became Critically ill and was placed on life support. It became necessary for Taxpayer A to provide care for her. Taxpayer A attests that she was involved in her mother’s care full-time seven days per week as a representative, guardian, and overseer of her mother’s medical care.

Taxpayer A asserts that her primary caregiver duties during the 60-day period resulted in her inability to attend to her financial affairs. Approximately 25 days after the 60-day period, Taxpayer A completed a rollover contribution of Amount M on Date 2 by contributing Amount M into IRA Y.

Taxpayer A has submitted documentation confirming the time period and severity of the medical condition of Taxpayer A’s mother.

Taxpayer A has not used Amount M for any other purpose.

Based on the facts and representations, you request a ruling that the Internal Revenue Service waive the 60-day rollover requirement, with respect to the distribution of Amount M contained in section 408(d)(3) of the Code (“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)(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)(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

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(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)(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,

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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 rollover of Amount M within the 60-day period prescribed by section 408(d)(3) of the Code was due to the serious medical illness of the Taxpayer's elderly mother for whom the Taxpayer was the principal caregiver and caretaker.

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 to Taxpayer A of Amount M. Provided all other requirements of Code section 408(d)(3), except the 60-day requirement are met, the Service will treat Taxpayer A's Date 2 contribution of Amount M to IRA Y as a rollover contribution within the meaning of Code section 408(d)(3).

Please note that, pursuant to code section 408(d)(3)(E), this ruling letter does not authorize the rollover of the Code section 401(a)(9) minimum required distributions.

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.

A copy of this letter ruling is sent to your authorized representative pursuant to the provisions of a Power of Attorney on file in this office.

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If you wish to inquire about this ruling, please contact Please address all correspondence to SE:T:EP:RA:T3.

Sincerely yours,

Loe V/

Frances V. Sloan Manager
Employee Plans Technical Group 3

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