PLR 201211032: IRS waives the 60-day IRA rollover deadline

Plain-English summary

The IRS waived the 60-day deadline for a taxpayer to roll over an IRA distribution after finding that incomplete information, inexperience with financial matters, and the taxpayer's medical condition impaired the ability to complete the rollover on time. The taxpayer had received the distribution after the death of a spouse and later deposited the amount into an account at another financial institution. The IRS granted 60 days from the date of the ruling to contribute the amount to a rollover IRA, provided the other rollover requirements were met. The ruling does not authorize rollovers of amounts that must be distributed under IRC § 401(a)(9).

Ruling snapshot

• Question: May the taxpayer receive a waiver of the 60-day IRA rollover requirement because incomplete information and personal circumstances prevented a timely rollover?
• Outcome: Approved.
• Key authorities: IRC §§ 408(d)(3), 401(a)(9), and 6110(k)(3); Treas. Reg. §§ 1.408-8 and 1.401(a)(31)-1

Full text (IRS public release)

201211032

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

TAX EXEMPT AND

GOVERNMENT ENTITIES DEC 19 2011

DIVISION

Uniform Issue List: 408.03-00

T:EP:RA:T3

Legend:

Taxpayer A

IRA X

Amount A =

Company B

Financial
Institution B

Date 1

Date 2

Date 3

Dear

This letter is in response to your request dated March 5, 2011, as supplemented by correspondence dated October 18, 2011, 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 the ruling requested:

Taxpayer A, age [illegible] represents that she received a distribution from IRA X totaling Amount A on Date 1. Taxpayer A asserts that her failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3) was due to Taxpayer A's reliance on incomplete information provided by Company B, as well as her inexperience in financial matters, both of which impaired her ability to accomplish a

201211032

Page 2

timely rollover. Taxpayer A further represents that Amount A has not been used for any other purpose.

Taxpayer A asserts that she is the beneficiary of IRA X, and was entitled to a distribution upon the death of her husband, the IRA holder. Shortly after his death, she received a letter from Company B dated Date 2 containing instructions for processing a claim for her late husband’s policy contract. The correspondence referred to an annuity contract number, and contained language advising her that the policy had been annuitized. The correspondence contained no language referring to an Individual Retirement Annuity. Company B provided no further explanation or options available to Taxpayer A regarding the distribution of Amount A. Taxpayer A asserts that she is elderly and inexperienced in financial matters and had relied upon her deceased husband to manage all financial matters. Taxpayer A has submitted additional documentation which shows that her current medical condition, compounded by the trauma caused by her husband’s recent death, impaired her ability to make sound financial decisions. As a result, on Date 1 Taxpayer A received a lump sum distribution from IRA X and on Date 3 she deposited Amount A into her account at Financial Institution B.

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

(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)).

201211032

Page 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 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 her assertion that her failure to accomplish a timely rollover was due to Taxpayer A's reliance on incomplete information provided by Company B, compounded by her medical condition, and her inexperience in financial matters, all of which impaired her ability to accomplish a timely rollover.

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 ruling letter 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.

201211032

Page 4

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 is being sent to your authorized representative pursuant to a Power of Attorney on file in this office.

If you wish to inquire about this ruling, please contact [illegible] at Please address all correspondence to SE:T:EP:RA:T3.

Sincerely yours,

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

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

cc: