PLR 201315036: IRS waives the 60-day IRA rollover deadline

Plain-English summary

The IRS granted a waiver of the 60-day rollover requirement for an IRA distribution. The taxpayer completed the rollover late after medical conditions impaired her ability to manage financial affairs during the rollover period. The Service found the circumstances consistent with the statutory waiver standard in section 408(d)(3)(I). The amount was treated as a valid rollover if the other requirements of section 408(d)(3) were met. The ruling did not authorize rollover of amounts required to be distributed under section 401(a)(9).

Ruling snapshot

• Question: Could the taxpayer receive a waiver of the 60-day IRA rollover requirement?
• Outcome: Approved, the 60-day requirement was waived on the stated facts.
• Key authorities: IRC §§ 408(d)(3)(I), 401(a)(9), and 6110(k)(3).

Full text (IRS public release)

DEPARTMENT OF THE TREASURY 9013 15036

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND JAN 1 6 2013

GOVERNMENT ENTITIES
DIVISION

Uniform Issues List: 408.03-00

SE. TER UT

LEGEND:
Taxpayer A =
IRA B =

Custodian C =

Amount 1 =

Dear

This is in response to your letters of September 4, 2012, and November 20, 2012, 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 she received a distribution of Amount 1 from her Individual Retirement Account (IRA), IRA B. Taxpayer A asserts that her failure to accomplish a rollover of Amount 1 within the 60-day period prescribed by section 408(d)(3) of the Code was due to medical conditions that impaired her ability to manage her financial affairs.

On December 22, 2011, Taxpayer A withdrew Amount 1 from IRA B. In January 2012, within the 60-day rollover period, Taxpayer A contacted Custodian C requesting information on how to rollover IRA B into an account with Custodian C. Custodian C provided email instructions on January 8, 2012. Taxpayer A did not rollover Amount 1 into an account with Custodian C until March 16, 2012, after the expiration of the 60-day period.

201315035

Taxpayer A represents that during the 60-day period she was under the care of a doctor for several conditions that severely impaired her mental abilities, including her ability to manage her financial affairs. Taxpayer A provided documentation indicating that she was examined by her doctor during the 60-day period and that she was prescribed medications to treat several medical conditions. Taxpayer A also provided a statement from her doctor indicating that during the 60-day period Taxpayer A experienced an exacerbation of a medical condition that resulted in poor judgment, faulty memory, poor concentrating ability, and impaired decision making abilities. Further, Taxpayer A provided documentation regarding her Social Security Disability Award, which was granted as a result of her medical conditions, and from which she received payment during the 60-day period following the distribution of Amount 1.

Based on the facts and representations, you request a ruling 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), 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

° 901315036

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 section 408(d)(3)(A) 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.

Revenue Procedure 2003-16, 2003-4 I.R.B. 359 provides that in determining whether to grant a waiver of the 60-day rollover requirement under 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 the documentation submitted by Taxpayer A is consistent with her assertion that her failure to accomplish a timely rollover of Amount 1 was due to the exacerbation of an ongoing medical condition that impaired her ability to manage her financial affairs during 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 Code section 408(d)(3), except the 60-day requirement, are met with respect to such contribution, Amount 1 will be considered a valid 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.

, 201315036

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 have any questions, please contact (I.D. # ) by

phone at or fax at . Please address all
correspondence to SE:T:EP:RA:T1.

Sincerely yours,
Co bte other!

Carlton Watkins, Manager
Employee Plans Technical Group 1

Enclosures:
Deleted Copy of Ruling Letter
Notice of Intention to Disclose