PLR 1324024: IRS waives an IRA rollover deadline after a decedent's medical incapacity

Plain-English summary

An executor asked to roll over the remaining portion of IRA distributions received by a decedent. The decedent had completed a partial rollover but did not complete the remainder within 60 days because a medical condition impaired her ability to make financial decisions. The IRS waived the deadline and gave the executor 60 days from the ruling date to contribute the remaining amount to a rollover IRA. The ruling also stated that an executor-named beneficiary would not be treated as a designated beneficiary for section 401(a)(9) purposes, and that the executor's authority depended on state law.

Ruling snapshot

• Question: Could an executor receive a waiver of the 60-day IRA rollover deadline after the decedent's medical incapacity prevented timely completion?
• Outcome: Approved
• Key authorities: IRC §§ 408(d)(3)(I), 401(a)(9), and 6110; Treas. Reg. § 1.401(a)(9)-4, Q&A-4; Rev. Proc. 2003-16

Full text (IRS public release)

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

DEPARTMENT OF THE TREASURY 2 0 1 3 2 4 0 2 4

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAR 18 2013

Uniform Issue List: 408.03-00

T:EP:RA:T3

Legend:
Decedent A =

IRA X =

IRA Y =

IRA Z =

Amount A =
Amount B =
Amount C =
Amount D =

State C =

Dear

This letter is in response to your request dated February 5, 2013, 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
(Code) with respect to Decedent A. You are the executor of the estate of Decedent A.

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

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201324024

You represent that prior to her death, Decedent A received a distribution of
Amount A and Amount B from IRA X and IRA Y, respectively, and on the same day,
executed a timely rollover of Amount C to IRA Z. The result is that Amount D, which is
the sum of Amount A and Amount B less Amount C, was not timely rolled over. You
represent that at the time of the distribution Decedent A suffered from a medical
condition which impaired her ability to make reasonably calculated decisions related to
her medical care and finances. You assert that the failure to accomplish a rollover of
Amount D within the 60-day period prescribed by section 408(d) was due to this medical
condition.

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

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 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)).

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.

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201324024

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 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
section 408(d)(3)(I), the Internal Revenue Service (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 you is consistent
with your assertion that Decedent A’s failure to accomplish a timely rollover was caused
by her medical condition.

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.
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, the
contribution of Amount D into an IRA will be considered a valid rollover contribution
within the meaning of section 408(d)(3) of the Code.

However, it is noted that, to the extent that you, as the executor, name a
beneficiary of the IRA, section 1.401(a)(9)-4, Q&A-4, of the Regulations provides that a
designated beneficiary must be a beneficiary as of the date of death. The Service will
not treat any beneficiary named by you, as executor, as a designated beneficiary under
section 401(a)(9). Thus, for purposes of section 401(a)(9), the rollover IRA will have no
designated beneficiary.

Finally, the scope of the executor’s powers is a matter of state law. This ruling
assumes that your actions in contributing Amount D into an IRA, set up in Decedent A’s
name, are in accordance with the laws of State C and pursuant to your authority as the
executor of the estate.

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.

201324024

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 is being 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
at . Please address all correspondence to
SE:T:EP:RA:T3.

Sincerely,
Laura B. Warshawsky, Manager
Employee Plans, Technical Group 3
Enclosures:

Deleted copy of ruling letter
Notice of Intention to Disclose

cc: