PLR 201207013: IRS waives the 60-day IRA rollover requirement after a duplicate distribution

Plain-English summary

The IRS waived the 60-day rollover requirement for an elderly taxpayer who received a duplicate required minimum distribution from an IRA because of an error by the financial institution. The taxpayer had not used the duplicate amount for another purpose and requested relief after the 60-day period expired. The IRS granted 60 days from the ruling letter's issuance for the taxpayer to contribute the amount back to the IRA, provided the other rollover requirements were met. The ruling does not authorize a rollover of amounts that must be distributed under IRC § 401(a)(9).

Ruling snapshot

• Question: May the taxpayer roll a duplicate IRA distribution into the IRA after the 60-day deadline?
• Outcome: Approved, the 60-day requirement was waived for the duplicate distribution
• Key authorities: IRC §§ 72, 401, 408, and 6110(k)(3); Rev. Proc. 2003-16

Full text (IRS public release)

201207013

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

NOV 23 2011

Uniform Issue List: 408.03-00

Legend:

Taxpayer A = * * **

IRA X = * * **

Financial Institution A = ****

Amount 1 = *
Date 1 = * ** *
Date 2 = * ** **

Dear ** *:

This is in response to your ruling request dated September 29, 2011, 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 asserts that the failure to accomplish the rollover within the 60-day period described by section 408(d)(3) of the Code was due to an error committed by Financial Institution A which caused her to create a duplicate required minimum distribution from

IRA X.

201207013

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Taxpayer A, age 84, represents that she was the owner of IRA X, a qualified individual retirement arrangement (“IRA”) established and maintained by Financial institution A under the rules of section 408 of the Code. Taxpayer A represents that on Date 1 she completed a form to withdraw her required minimum distribution of Amount 1 from IRA X. Taxpayer A asserts that before she received the distribution, Financial Institution A erroneously sent her an additional form to withdraw her required minimum distribution from IRA X. She completed the second form on Date 2, believing that she needed to complete this form as well to receive her required minimum distribution. She was unaware that the second form requested a duplicate distribution of Amount 1 until after the 60-day rollover period. Taxpayer A further represents that Amount 1 has not been

used for any other purpose.

Based on the above facts and representations, Taxpayer requests a ruling that the Internal Revenue Service (“Service”) waive the 60-day rollover requirement contained in section 408(d)(3) of the Code with respect to the duplicate distribution 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

(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).

201207013

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 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’s authorized representative is consistent with Taxpayer A’s assertion that her failure to accomplish a timely rollover was due to an error committed by Financial Institution A which caused Taxpayer to request a duplicate required minimum distribution from IRA X.

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 from IRA X. Taxpayer A is granted a period of 60 days from the issuance of this ruling letter to contribute Amount 1 into 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 1 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.

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.

A copy of this letter has been sent to your authorized representative in accordance with a power of attorney on file in this office.

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If you wish to inquire about this ruling, please contact *** * (Government I.D. Number -) at () -**, Please address all correspondence to SE:T:EP:RA:T2.

Sincerely,

[signature illegible]
Donzell Littlejohn, Manager
Employee Plans Technical Group 2

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

CC: [redacted]