PLR 201216050: IRS waives the 60-day IRA rollover deadline after serious medical problems

Plain-English summary

An individual withdrew an amount from an IRA and deposited it into another account, intending to move it into an IRA with a higher interest rate. The individual did not complete the rollover within 60 days because of a serious medical emergency and multiple hospitalizations. The IRS accepted the representations that the amount had not been used for another purpose and waived the 60-day requirement under section 408(d)(3). The individual received 60 days from the ruling date to contribute the amount to a rollover IRA, subject to the other rollover requirements.

Ruling snapshot

• Question: Could the IRS waive the 60-day IRA rollover requirement because the taxpayer experienced a serious medical condition and multiple hospitalizations?
• Outcome: Approved
• Key authorities: IRC § 408(d)(3); Rev. Proc. 2003-16; IRC § 6110(k)(3).

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE 2012 l 60 30

WASHINGTON, D.C. 20224

TAX EXEMPT AND JAN 2 4 2012

GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00

Legend:

Taxpayer A

IRA B

Bank C

Account D

Amount 1
Dear

This is in response to your ruling request dated April 28, 2011, as supplemented by additional information dated April 28, August 24, October 28 and November 22, 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 A, age _, asserts that his failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3) was due to his medical condition and multiple hospitalizations during the rollover period. Taxpayer A further asserts that Amount 1 has not been used for any purpose.

Taxpayer A maintained IRA B, an individual retirement account, under section 408(a) of the Code, with Bank C. Taxpayer A represents that he withdrew Amount 1 from IRA B on March 10, 2010, and immediately deposited Amount 1 into Account D. Taxpayer A asserts that he intended to roll over Amount 1 into an IRA with a higher interest rate. Documentation submitted indicates that on March 21, 2010, Taxpayer A suffered a serious medical emergency and, as a result, was hospitalized and discharged numerous times during and after the 60-day rollover period.

201216000

Based on the above facts and representations, with respect to the distribution of Amount 1 from IRA B, you request a ruling that the Internal Revenue Service waive the 60 day rollover requirement contained in section 408(d)(3) of the Code.

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 60" 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 60" 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)(1) 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.

201216050

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)(1), 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 the documentation you submitted is consistent with your assertion that the failure to accomplish a timely rollover to an eligible retirement plan, Such as an IRA, was caused by your medical condition and multiple hospitalizations during the rollover period.

Therefore, pursuant to section 408(d)(3)(I), the Service hereby waives the 60-day rollover requirement with respect to the distribution of Amount 1 from IRA B and Taxpayer A is granted a period of 60 days from the issuance of this letter ruling to contribute Amount 1 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 1 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 transaction described herein under the provisions of any other section of either the Code or regulations that may be applicable thereto.

This letter is directed only to the taxpayer who requested it. Section 61 10(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 SE:T:EP:RA:T1, (Identification No. ), at .

Sincerely yours,
Caller é. Wathen?

Carlton A. Watkins, Manager
Employee Plans Technical Group 1

Enclosures:
Deleted Copy of this Letter
Notice of Intention to Disclose, Notice 437