PLR 1133015: IRS waives the 60-day IRA rollover deadline

Plain-English summary

An individual missed the 60-day deadline to roll an IRA distribution into a new IRA after a bank employee gave incorrect information about the rollover period. The individual represented that the distribution had not been used for another purpose and that the funds remained in the new IRA. The IRS waived the 60-day requirement under section 408(d)(3)(I), allowing the amount to be treated as a valid rollover if the other requirements of section 408(d)(3) were met.

Ruling snapshot

• Question: May the taxpayer receive a waiver of the 60-day IRA rollover requirement?
• Outcome: Approved
• Key authorities: IRC §§ 72, 408, and 6110; Rev. Proc. 2003-16

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00 MAY 24 2011
XXXXXXKXXKXKXKXKKK
XXXXXXXKXXXXXXX
XXXXXXXXXXKXXXX SE’ T' Ep’ 2A: +y
Legend:
Taxpayer A = XXXXXXXXXXXXK
Individual B = XXXXXXXXXKXX
Bank A = XXXXXXXXXXXXK
IRA X = XXXXXXXXKXKKXK
XXXXXXXXXXXX
IRA Y = XXXXXXXXXXXX
XXXXKXXKXXXKXKXK
State C = XXXXXXXXXXKX
State M = XXXXXXXXXKXXX
State N = XXXXXXXXKXXXK
Amount A = XXXXXXXXXXXX
Date 1 = XXXXXXXXXXKX
Date 2 = XXXKXXKXKXKXKXKXKX
Date 3 = XXXXXXXKXXKXKX
Date 4 = XXXXXXXXKXXXX
Dear XXXXXXXXX:

This letter is in response to your letter dated August 18, 2010, in which you
requested a waiver of the 60-day rollover requirement contained in section 408(d)(3) of

the Internal Revenue Code (the “Code”).

XXXXXKXKKXXK
Page 2

The following facts and representations have been submitted under penalty of
perjury in support of the ruling requested:

Taxpayer A, age [illegible] represents that he received a distribution from IRA X
totaling Amount A on Date 1. Taxpayer A asserts that his failure to accomplish a
rollover of Amount A within the 60-day period prescribed by section 408(d)(3) was due
to an error by an employee of Bank A. Taxpayer A also represents that Amount A has

not been used for any other purpose.

Taxpayer A asserts that when IRA X matured, he intended to rollover the funds
from IRA X to a new financial institution in State N, but was unable to do so because of
work commitments out-of-state. Taxpayer A lives in State N and works in States C and
M. Throughout much of the 60-day rollover period Taxpayer A had to work out-of-state.
Near the end of the rollover period Taxpayer A asked his spouse, Individual B, to open
a new IRA account on his behalf at Bank A. She attempted to open a new IRA account
on Date 2, but was told by a Bank A associate that an IRA owner must be present in
order for someone else to open an IRA on his behalf; and that Taxpayer A could open
an IRA upon his return to State N even though the 60-day rollover period would have
expired. When Taxpayer A returned to Bank A on Date 3, one day after the expiration of
the 60-day rollover period, the Bank A associate reconfirmed that there would be no
problem with exceeding the 60-day period. Taxpayer A deposited the IRA check into a
new IRA account, IRA Y. Three days later on Date 4, Bank A informed Taxpayer A that
there would be a problem with the 60-day rollover period being exceeded. Amount A
remains in IRA Y at Bank A. Documentation from Bank A shows that its associate
provided Taxpayer A incorrect information about the 60-day rollover period.

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

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

XXXXKXKXXXXXX
Page 3

(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), 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 due to
an error by Bank A.

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. 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 which was
deposited into IRA Y, will be considered a valid rollover contribution within the meaning

of section 408(d)(3) of the Code.

XXXXXXKXXXKX
Page 4

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 XXXXX, ID XX-XXXXX at
(XXX) XXX-XXXX. Please address all correspondence to SE:T:EP:RA:T3.

Sincerely,
ra cA Oe =F ALCL ,] -
g~ Laura B. Warshawsky, Manager
Employee Plans Technical Group 3

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