PLR 1127022: IRS waives the 60-day IRA rollover requirement

Plain-English summary

An individual asked the IRS to waive the 60-day deadline for rolling a distribution from an IRA into another retirement account. The individual said that a spouse's serious medical condition, hospitalization, and need for constant care prevented a timely rollover, and the distributed amount remained intact in a savings account. The IRS found that these circumstances were beyond the individual's reasonable control and waived the deadline under IRC § 408(d)(3)(I). It gave the individual 60 days from the ruling date to contribute the amount to a rollover IRA, provided the other rollover requirements were met.

Ruling snapshot

• Question: Could the individual receive a waiver of the 60-day IRA rollover requirement because of a spouse's serious medical circumstances?
• Outcome: approved
• Key authorities: IRC §§ 408(d)(1), 408(d)(3), and 6110(k)(3); Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE 201127022

WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

APR 14 2011
U.I.L. 408.03-00
XXXXXXXXXXXXXXXAXXXXXX —: , ’ ‘
XXXXXXXXXXXXXXXXXXXKX 4 PRA, RA.T 3
XXXXXXXXXXXXXXXAXXXXXX
Legend:
TaxpayerA = XXXXXXXXXXXXXXXXXXX
IRA X = XXXXXXXXXAXXXXXXXAXXX
AmountD = XXXXXXXXXXXXXXAXXXXX
Bank B = XXXXXXXXXXXXXXXXAXXX
Dear xxxxXxXXXXxX:

This is in response to your letter dated xxxxxxxxxxxxx, as supplemented by
correspondence dated xxxxxxxxxXx, XXXXXXXXXX XXXXXXXXXX, XXXXXXXXX,
XXXXXXXXXX ANd XXXXXXXXXXX, 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 your request.

Taxpayer A represents that on xxxxxxXxXXxXxXXXXXXxx, he received a distribution
from IRA X totaling Amount D, intending to roll it over to another Individual
Retirement Account which would yield him a higher rate of return as he was
losing money from his current investment in IRA X.

Taxpayer A asserts that his failure to accomplish a rollover of Amount D from IRA
X within the 60-day period prescribed by section 408(d)(3) of the Code was due
to his wife’s serious medical condition, hospitalization, the catastrophic events
that afflicted his wife and the need for constant medical attention and numerous
doctor visits during the 60-day rollover period, which together impaired his ability
to accomplish a timely rollover.

2 201127022

Taxpayer A further asserts that during the 60-day period, he was a full time
caregiver to his wife and that his attentions were all devoted to his wife and trying
to help her and manage her medical condition and keep her alive.

Taxpayer A states that he was the person solely responsible for the daily
household activities required for his wife’s care, house cleaning, meals, laundry,
dressing assistance, wheelchair assistance, bathing assistance and assisting
with giving medication as she could do very little for herself and her mental
capacity was going downhill rapidly. Taxpayer's wife subsequently died on xxxxx.

Taxpayer A states that he withdrew Amount D from IRA X on xxxxxxxxxx and on
XXXXXXXXXXX, deposited Amount D in his savings account with Bank B. Taxpayer
A further states that he was unable to complete the rollover during the 60-day
period because he was caring for his wife, whose condition was deteriorating.

Amount D remains intact in his savings account with Bank B and has not been
used for any other purpose.

Based upon the facts and representations, Taxpayer A requests ruling that the

Internal Revenue Service (the “Service”) waive the 60 day rollover requirement
with respect to Amount D.

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) i is
paid into an IRA for the benefit of such individual not later than the 60th

_ day after the day on which the individual received the payment or
distribution; or

(ii) the entire amount received (including money and any other property) is
paid into an eligible retirement plan (or 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)).

201127022

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 in 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 included in gross income because of the application
of section 408(d)(3).

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 and good
conscience, including casualty, disaster, or other events beyond the reasonable
control of the individual subject to such requirement. Only distributions that occur

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, 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, or hospitalization, incarceration, restrictions imposed by a
foreign country or postal error; (3) the use of 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 his involvement with his wife’s medical condition, hospitalization, need
for constant medical attention and numerous treatments by doctors during the
60-day rollover period.

Therefore, pursuant to Code section 408(d)(3)(I), the Service hereby waives the
60-day rollover requirement with respect to the distribution of Amount D from IRA
X. Taxpayer A is granted a period of 60 days from the issuance of this ruling
letter to contribute Amount D 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 D 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 transactions described
herein under the provisions of any other section of either the Code or regulations,
which may be applicable thereto.

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of
the Code provides that it may not be used or cited by others as precedent.

: 201127022

If you have any questions regarding this letter, please contact xxxxxxXXxXXXXXXX,
SE:T:EP:RA:T:3 at xxxxxxxxXXXXXXX.

Sincerely yours,

A B, WhrP > ——

Laura B. Warshawsky, Manager
Employee Plans Technical Group 3
Enclosures:

Deleted copy of letter ruling
Notice 437