PLR 1219039: IRS waives the 60-day IRA rollover requirement

Plain-English summary

The IRS waived the 60-day rollover requirement for an elderly taxpayer who intended to move IRA funds into a new IRA certificate of deposit but instead received a non-IRA certificate of deposit from the bank. The taxpayer had relied on the bank to complete the rollover and believed the transaction had been completed correctly. The IRS granted 60 days from the ruling date to contribute the eligible amount to a rollover IRA, subject to the other rollover requirements. The ruling excluded amounts required to be distributed under IRC § 401(a)(9) and expressed no opinion on other tax provisions.

Ruling snapshot

• Question: Should the 60-day IRA rollover requirement be waived after the bank opened a non-IRA CD instead of an intended IRA CD?
• Outcome: Approved
• Key authorities: IRC §§ 72, 401, 408, and 6110; Rev. Proc. 2003-16

Full text (IRS public release)

291219032

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

TAX EXEMPT AND
GOVERNMENT ENTITIES

DIVISION
[illegible]
U.I.L. 408.03-00 TEP RA’ 13
XXXXXXXXXXXXXKXXKX
XXXXXXXXXXXXXXXKX
XXXXXXXXXXXXXXXKX
Legend:
Taxpayer A = XXXXXXXXXXXXXXXXXXXXX
Individual B = XXXXXXXXXXXXXXXXXXXXX
IRA X = XXXXXXXXXXXXXXXXXKXXKK
IRA Y = XXXXXXXXXXXXXXXXKXXKXXK
Bank F = XXXXXXXXXXXXXXXXXXXXKX
Bank B = XXXXXXXXXXXXXXXXXXKXK
Amount D = XXXXXXXXXXXXXXXXXXXXX
Amount C = XXXXXXXXXXXXXXXXKXKK
Amount E = XXXXXXXXXXXXXXXXKXXKX
Date 1 = XXXXXXXXXXXXXKXXXKXX
Date 2 = XXXXXXXXXXXXXXXXKXK

Date 3 = XXXXXXXXXXXXXXXKXKKK

201219039

Dear xxxxxxxx:

This is in response to a request dated xxxxxxxx, as supplemented by
correspondence dated xxxxxxxxx, 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 89. represents that she received distributions from IRA X and
IRA Y totaling Amount E. Taxpayer A asserts that her failure to accomplish a
timely rollover within the 60-day period prescribed by section 408(d)(3) of the
Code was due to a non-IRA certificate of deposit (CD) opened by Bank B rather
than an IRA CD as Taxpayer A intended,

Taxpayer A's husband, Individual B who passed away on Date 1, established
IRA X and IRA Y CDs with Bank F prior to his death. On Date 2 when

the CDs reached their maturity date, Taxpayer A withdrew funds totaling Amount
E from IRA X and IRA Y. On Date 3 Taxpayer A went to Bank B with the intent to
rollover Amount E into a new IRA CD at Bank B within the 60 day rollover period.

Taxpayer A is inexperienced with managing her investment accounts, as they
were solely handled by her husband. Taxpayer A relied on Bank B to roll over
Amount E into the same type of IRA accounts that her husband had, and was not
aware that the funds were inadvertently rolled over into a non-IRA CD. Taxpayer
A believed that the CD was an IRA CD.

Taxpayer A did everything necessary to effect the desired rollover to an IRA
within the 60 day rollover period and she believed that the rollover had been
completed.

Based on the above facts and representations, you request a ruling that the
Internal Revenue Service waive the 60-day rollover requirement with respect to
the distribution of Amount D (Amount E less Amount C, the amount of the 2010
required minimum distribution).

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.

[illegible]

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-

(1) 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 received the payment or
distribution: or

‘) 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 included 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 and good
conscience, including casualty, disaster, or other events beyond the reasonable
control of the individual subject to such requirement. Only distributions that occur
after December 31, 2001, are eligible for the waiver under section 408(d)(3)(I) of
the Code.

[illegible]

Rev. Proc. 2003-16, 2003-41 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 402(c)(3) 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,

The information presented and documentation submitted by Taxpayer A is
consistent with her assertion that her failure to accomplish a timely rollover of
Amount E was caused by Bank B opening a non-IRA CD rather than an IRA CD
as Taxpayer A intended.

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
D (Amount E less Amount C). You are granted a period of 60 days from the
issuance of this ruling letter to contribute Amount D 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 D 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 is being forwarded to your authorized representative
pursuant to a Power of Attorney on file in this office.

[illegible]

If you wish to inquire about this ruling, please contact xxxxxxXxXXxXxXxxXxx,
SE:T:EP:RA:T3, at xxxxxxxxxxxx,

Sincerely yours,

[illegible]
4 - Laura B. Warshawsky, Manager
Employee Plans Technical Group 3
Enclosures:
Deleted Copy of letter ruling
Notice of Intention to Disclose

Cc: XXXXXXAXXXXAXXAXXAXXKXKXKX