PLR 201115029: IRS waived the 60-day IRA rollover deadline

Plain-English summary

The IRS considered a taxpayer who moved money from an IRA into a non-IRA account and did not complete the rollover within 60 days. The taxpayer intended to transfer the money to a new IRA, supplied documentation of that intent, and stated that the delay resulted from an error by a financial institution. The IRS waived the 60-day requirement under § 408(d)(3)(I) and gave the taxpayer 60 days from the ruling date to contribute the amount to a rollover IRA. The relief did not cover amounts required to be distributed under the applicable minimum-distribution rules, and all other rollover requirements still applied.

Ruling snapshot

• Question: May the IRS waive the 60-day IRA rollover deadline after an administrative error by a financial institution?
• Outcome: Approved
• Key authorities: IRC §§ 72, 401, 408, and 6110; Rev. Proc. 2003-16

Full text (IRS public release)

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

201115029

JAN 20 2011

TAX EXEMPT AND GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00
SE:T:EP:RA:T2

Legend:
Taxpayer A: ****
IRA X: *** : *
*** ****
Account D: **, **,
*** ***
Amount A: **
Financial Institution B: **** Financial Institution F: ***, ***.
Date 1: ***
Date 2: ***
Date 3: ***
Date 4: ***

Dear ****:

This is in response to a request submitted on your behalf by your authorized representative dated ****, as supplemented by additional correspondence submitted on *** and on *** in which Taxpayer A requests 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 **, had an Individual Retirement Arrangement (IRA), IRA X, which was maintained by Financial Institution B. Taxpayer A represents that on Date 1, Amount A was transferred from IRA X to Account D, which was maintained by Financial Institution B. Account D is a non-IRA account. Taxpayer A has stated that it was his intent to complete a rollover of Amount A within the statutorily required 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 an error committed by Financial Institution B. Taxpayer A represents that Amount A has not been used for any

other purpose.

Taxpayer A has provided documentation that he elected to transfer Amount A from IRA X with Financial Institution B to an IRA with Financial Institution F. Taxpayer A has provided documentation that on Date 2 he furnished paperwork to Financial Institution F demonstrating his intent to transfer Amount A from IRA X to a new IRA with Financial Institution F and on Date 3 Financial Institution B issued a letter recognizing Taxpayer A’s intent to transfer Amount A from IRA X to a new IRA. Taxpayer A has provided documentation that both Financial Institution B and Financial Institution D were aware of his intent to transfer his funds from IRA X to a new IRA with Financial Institution F. Taxpayer A has provided a letter from Financial Institution B dated Date 4 reflecting that an administrative error occurred in the transfer.

Based on the facts and representations, Taxpayer A requests a ruling that the Internal Revenue Service waive the 60-day rollover requirement with respect to the distribution of Amount A contained in section 408(d)(3) of the Code in this instance.

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)(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 section 408(d)(3)(A) 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) 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.

The information presented and documentation submitted by Taxpayer A is consistent with his assertion that his failure to accomplish a timely rollover was caused by an error committed by Financial Institution B.

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 letter ruling 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.

This ruling does not authorize the rollover of amounts that are required to be distributed by section 401(a)(9) of the Code, made applicable to IRAs pursuant to section 408(a)(6).

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.

Pursuant to a power of attorney on file with this office, a copy of this letter ruling is being sent to your authorized representative.

If you wish to inquire about this ruling, please contact ****, Tax Law Specialist, Employee Plans Technical Group 2 at () *** or via fax at () ***. Please address all correspondence to SE:T:EP:RA:T2.

Sincerely,

Michael J. Miller, Manager
Employee Plans Technical Group 2

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

CC: