60-day rollover waiver denied

Plain-English summary

An individual asked the IRS to waive the 60-day deadline for rolling a retirement-plan distribution into another qualified retirement account. The individual said that he did not know about the deadline, was adjusting to a move, and had not read or retained the distribution documents. The IRS declined the waiver because the taxpayer did not provide evidence of an intent to roll over the distribution or documentation connecting the missed deadline to the factors in Rev. Proc. 2003-16. The distribution remained subject to the ordinary rollover rules.

Ruling snapshot

• Question: Whether the IRS should waive the 60-day rollover requirement for a retirement-plan distribution.
• Outcome: Denied.
• Key authorities: IRC § 402(c)(3); Rev. Proc. 2003-16.

Full text (IRS public release)

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE

WASHINGTON, D.C. 20224

MAY 29 2012
U.I.L. 402.08-00

T:EP:RA:T3

XXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXX

Legend:

Taxpayer A = XXXXXXXXXXXXXXXXX
Plan X = XXXXXXXXXXXXXXXXX
Company E = XXXXXXXXXXXXXXXXX
Amount D = XXXXXXXXXXXXXXXXXK
Date 1 = XXXXXXXXXXXXXXXXX
Date 2 = XXXXXXXXXXXXXXXXX
Date 3 = XXXXXXXXXXXXXXXXX
State S = XXXXXXXXXXXXXXXXXX
State T = XXXXXXXXXXXXXXXXXX
Dear xxxxx:

201234034

This is in response to your request dated xxxxxxxXxxXxxXxx, as supplemented by
correspondence dated xxxxxXxXxXXXXXXX, and XXXXXXXXXxXx, in which you request a
waiver of the 60-day rollover requirement contained in section 402(c)(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 45, represents that he received a distribution from Plan X
totaling Amount D on Date 1. Taxpayer A asserts that his failure to accomplish

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rollover within the 60-day period prescribed by section 402(c)(3) of the Code was
due to his lack of knowledge of the 60-day rollover requirement and his
adjustment to life in State T.

On Date 1, Taxpayer A, who had terminated employment of Company E,
requested a distribution from Plan X of Company E’s retirement plan. During the
60-day period, following Date 1, on Date 2, Taxpayer A moved from State S to
State T because the weather in State S affected the health of his wife and
children. Taxpayer A asserts that he had a lot of things to do to adjust to life in
State T and that he did not know that he had the option to rollover the distribution
to another qualified retirement account until Date 3 when he met his tax preparer.

Taxpayer A represents that he did not read the documents provided to him by
Company E in connection with the distribution of Amount D and that they were
lost in the mail. Amount D remains in Taxpayer A’s checking account.

Based on the above facts and representations, you request a ruling that the

Internal Revenue Service (Service) waive the 60-day rollover requirement with
respect to the distribution of Amount D.

Section 402(c) of the Code provides that if any portion of the balance to the credit
of an employee in a qualified trust is paid to the employee in an eligible rollover
distribution, and the distributee transfers any portion of the property received in
such distribution to an eligible retirement plan, and in the case of a distribution of
property other than money, the amount so transferred consists of the property
distributed, then such distribution (to the extent transferred) shall not be included
in gross income for the taxable year in which paid. Section 402(c)(3)(A) of the
Code states that such rollover must be accomplished within 60 days following the
day on which the distributee received the property. An individual retirement
account (IRA) constitutes one form of eligible retirement plan.

Section 402(c)(3)(B) of the Code provides, in relevant part, that the Secretary
may waive the 60-day requirement under section 402(c) 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 402(c)(3)(B) 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 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,

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whether the check was cashed); and (4) the time elapsed since the distribution
occurred.

Taxpayer A has not presented any evidence to the Service which shows that he
had the intent to roll over the distribution of Amount D. Further, Taxpayer A has
not provided any documentation to show that his inability to rollover Amount D
within the 60-day rollover period contained in section 402(c)(3)(B) of the Code
was affected by any of the factors described in Rev. Proc. 2003-16. Therefore,
the Service declines to waive the 60-day rollover requirement with respect to the
distribution of Amount D.

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.

If you wish to inquire about this ruling, please contact xxxxxXXXXXXXXXXXX,
SE:T:EP:RA:T3, at xxxxxxxXXXXXXXX.

Sincerely yours,

Laura B. Warshawsky, Manager
Employee Plans Technical Group 3

Enclosures:

Deleted Copy of letter ruling
Notice of Intention to Disclose