PLR 1206023: IRS denied a 60-day IRA rollover waiver for insufficient documentation

Plain-English summary

The IRS considered an elderly taxpayer's request to waive the 60-day rollover deadline for distributions from two IRAs. The taxpayer said a financial institution employee incorrectly told him he had 90 days to complete the rollover, and he deposited the funds into a savings account while intending to move part of them into a new IRA. The IRS denied the request because the taxpayer provided no documentation beyond his own statement to support the alleged financial institution error. As a result, the requested amount was not treated as a valid rollover contribution.

Ruling snapshot

• Question: Should the IRS waive the 60-day rollover requirement based on an alleged financial institution error?
• Outcome: Denied
• Key authorities: IRC §§ 72, 408(d)(3), and 6110(k)(3); Rev. Proc. 2003-16.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE

WASHINGTON, D.C. 20224 201206023

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00

NOV 18 2011

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Legend:

Taxpayer A ***
IRA X ***
IRA Y ***
Bank A ***
Bank B ***
Employee Q ***
Amount 1 ***
Amount 2 ***
Amount 3 ***
Account A ***
Date 1 ***

Date 2 ***


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Dear ***:

This letter is in response to your request dated October 8, 2010, as supplemented by
written correspondence dated December 19, 2010 and August 24, 2011, in which you
request a waiver of the 60-day rollover period 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 86, represents that on Date 1 he went to Bank A and withdrew
Amount 1 from IRA X and Amount 2 from IRA Y. Taxpayer A asserts that his failure to
accomplish a rollover within the 60-day period prescribed by section 408(d) of the Code
of Amount 3 from IRA X and IRA Y was due to financial institution error. Taxpayer A
asserts that Amount 3 has not been used for any purpose.

Taxpayer A represents that he was the owner of IRA X and IRA Y, individual retirement
arrangements maintained at Bank A on his behalf. Taxpayer A represents that on

Date 1, he received distributions of Amount 1 from IRA X and Amount 2 from IRA Y with
the intent of rolling over Amount 3, a portion of the sum of Amount 1 and Amount 2, into
an IRA at another financial institution. Taxpayer A further represents that on Date 1,
Employee Q of Bank A told him that he had 90 days to rollover Amount 1 and Amount 2
into another IRA. On Date 1, Taxpayer A deposited Amount 1 and Amount 2 into
Account A, a savings account, at Bank B. On Date 2, within 90 days of Date 1,
Taxpayer A went to Bank B to open a tax-qualified IRA and complete a rollover of
Amount 3 into that IRA. A Bank B employee told Taxpayer A that he could not complete
a rollover because he missed his 60-day rollover window. Taxpayer A represents that
his failure to rollover Amount 3 into a tax-qualified IRA within the 60-day period
prescribed by section 408(d)(3) of the Code was due to an error committed by
Employee Q of Bank A and his reliance on the mistaken advice of Employee Q of

Bank A. Taxpayer A represents that Amount 3 has not been used for any purpose.

Based on the facts and representations, Taxpayer A requests 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 3.

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—


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

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.

Taxpayer A did not provide any documentation, other than his own statement, that
supports the alleged financial institution error. Accordingly, Taxpayer A has not provided
sufficient documentation to support a favorable ruling. Under the circumstances
presented in this case, the Service hereby declines to waive the 60-day rollover
requirement with respect to the distribution of Amount 3 from IRA X and IRA Y, and thus



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Amount 3 will not be considered a valid rollover contribution within the meaning of
section 408(d)(3) of the Code, because the 60-day rollover requirement was not
satisfied.

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, contact *** at ([illegible]). Please
address all correspondence to SE:T:EP:RA:T2.

Sincerely yours,

Donzell Littlejohn, Manager,
Employee Plans Technical Group 2

Enclosures:

Deleted copy of ruling letter
Notice of Intention to Disclose

CC:
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