PLR 201050045: IRS waives 60-day IRA rollover deadline

Plain-English summary

A taxpayer withdrew money from an IRA after a financial institution employee incorrectly said the rollover period was 90 days. The taxpayer missed the 60-day deadline but kept the distribution in a checking account and sought relief after learning of the error. The IRS waived the deadline under IRC § 408(d)(3)(I) and gave the taxpayer 60 days from the ruling date to contribute the amount to a rollover IRA. The ruling matters because misleading advice from a financial institution was treated as a circumstance supporting rollover relief.

Ruling snapshot

• Question: May the taxpayer receive a waiver of the 60-day IRA rollover requirement?
• Outcome: approved
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE 201050045
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES

DIVISION

SEP 2 0 2010

Uniform Issue List: 408.03-00

SE:T:EP:RA:T4

Legend:

Taxpayer A =
IRA X =

Individual C =

Financial Institution G
Amount B =
Date 1 =
Date 2 =
Dear

This is in response to your letter dated , aS supplemented by a note from you dated , a letter dated , submitted on your behalf by your authorized representative, and your letter 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, age 64, represents that his failure to accomplish a rollover of Amount B distributed from IRA X within the 60-day period prescribed by section 408(d)(3) was due to misleading information provided by Individual C, an employee of Financial Institution G. Taxpayer A also represents that Amount B has not been used for any other purpose.

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201050048

On Date 1, Taxpayer A, concerned over the recent drop in value of IRA X, contacted Financial Institution G, the holder of IRA X, where he was incorrectly advised by Individual C, an employee of Financial Institution G, that Taxpayer A would have 90 days in which to roll over any funds withdrawn from IRA X into an eligible IRA without suffering tax consequences. Taxpayer A withdrew Amount B from IRA X on Date 1. Amount B was deposited into Taxpayer A’s checking account. On Date 2, when Taxpayer A attempted to roll over Amount B within the 90-day period that he understood he was allowed, he was advised that the rollover was no longer possible because the 60-day rollover period had expired. Documentation from Financial Institution G includes an acknowledgement that Individual C’s advice to Taxpayer A was misleading and an apology for any confusion that advice may have caused.

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 the distribution of Amount B.

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

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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 his assertion that his failure to accomplish a timely rollover of Amount B was caused by misleading information provided to him by Individual C, an employee of Financial Institution G.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service hereby waives the 60-day rollover requirement with respect to the withdrawal of Amount B from IRA X. Taxpayer A is granted a period of 60 days from the issuance of this ruling letter to contribute Amount B 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 B 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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A copy of this letter ruling has been sent to your authorized representative pursuant to a power of attorney on file in this office.

If you wish to inquire about this ruling, please contact (ID # )at( ) . Please address all correspondence to SE:T:EP:RA:T4.

Sincerely yours,

[illegible], Manager,
Employee Plans Technical Group 4

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

CC: