PLR 1246043: IRS waives the 60-day rollover deadline after incorrect financial advice

Plain-English summary

The IRS waived the 60-day rollover requirement for an individual who relied on incorrect information from a financial institution about the time available to return funds to an IRA. The taxpayer had distributed funds from an IRA, wrote a check to repay the amount, and deposited it after the 60-day period. The IRS found that the financial institution's misinformation supported relief and treated the contribution as a rollover, assuming the other requirements of IRC § 408(d)(3) were met. The ruling did not authorize the rollover of amounts required to be distributed under IRC § 408(b)(3).

Ruling snapshot

• Question: Could the IRS waive the 60-day IRA rollover deadline after incorrect information from a financial institution?
• Outcome: Approved
• Key authorities: IRC §§ 401, 408(d)(1), 408(d)(3), and 6110; Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE

WASHINGTON, D.C. 20224 201246043

TAX EXEMPT AND
GOVERNMENT ENTITIES

DIVISION AUG 2 0 2012

Uniform Issue List: 408.03-00

T:EP:RA:T1

Legend:
Taxpayer A =

IRA B =

Financial Institution C

Amount 1 =

Dear

This letter is in response to your request dated May 23, 2012,from 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
("Code").

The following facts and representations have been submitted under penalty of
perjury in support of the ruling requested.

Taxpayer A represents that he received a distribution from IRA B of Amount 1.
Taxpayer A asserts that his failure to accomplish a rollover within the 60-day
period prescribed by Code section 408(d)(3) was due to his reliance on incorrect
information given him concerning the 60-day period by a representative of
Financial Institution C.

Taxpayer A maintained IRA B, an individual retirement account under section
408(a) of the Code. On February 26, 2010, Taxpayer A took Amount 1 from IRA
B. His financial advisor at Financial Institution C provided incorrect information
regarding how long Taxpayer A had to repay the money to IRA B or another IRA.
Based on this information, Taxpayer A wrote a check on May 25, 2010 and hand-
delivered it to the office of Financial Institution C in Aiken, SC. No checks are
deposited in the office of Financial Institution C in Aiken, SC but are sent to the

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office of Financial Institution C in Augusta, GA the following day and deposited
through that office. The check was deposited on May 28, 2010 in IRA B. The
ruling request is accompanied by a letter from Financial Institution C which
admits that Taxpayer A was given incorrect information about how long he had to
repay Amount 1 into IRA B.

Based on the above facts and representations, you request 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 distribution of Amount 1.

Section 408(d)(1) of the Code provides that, except as otherwise provided in
section 408(d) of the Code, 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 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) of the Code).

Section 408(d)(3)(B) of the Code provides that section 408(d)(3) of the Code
does not apply to any amount described in section 408(d)(3)(A)(i) of the Code
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) of the Code from an IRA which was not
includible in gross income because of the application of section 408(d)(3) of the
Code.

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).

201246043

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 sections 408(d)(3)(I) and 402(c)(3)(B) 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 the documentation submitted by Taxpayer A is
consistent with his assertion that his failure to accomplish a timely rollover of
Amount 1 was due to his reliance on misinformation given him by Financial
Institution C concerning the 60-day period.

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
1 from IRA B. Provided all other requirements of section 408(d)(3) of the Code,
except the 60-day requirement, were met with respect to Taxpayer A’s
contribution of Amount 1 into IRA B on May 28, 2010, such contribution will be
considered a rollover contribution within the meaning of section 408(d)(3).

This ruling does not authorize the rollover of amounts that are required to be
distributed by section 408(b)(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
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.

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A copy of this letter ruling has been 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 ** (I.D. *), SE:T:EP:RA:T1, at (*)

[illegible handwritten signature]

Sincerely yours,

[illegible handwritten signature]

Carlton A. Watkins, Manager
Employee Plans Technical Group 1

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

cc: