PLR 1330047: IRS denies rollover waiver because the contribution was timely

Plain-English summary

An individual received a retirement-plan distribution and asked the IRS to waive the 60-day rollover requirement because of the medical condition and death of the individual's mother. The IRS found that the individual deposited the distribution into an IRA within 60 days after actually receiving the replacement check. Because the rollover was timely, the IRS denied the requested waiver because no waiver was needed. The ruling states that, if the other requirements of § 402(c)(3) were met, the contribution was a valid rollover contribution.

Ruling snapshot

• Question: Should the IRS waive the 60-day rollover requirement for the retirement-plan distribution?
• Outcome: Denied, because the contribution was made within 60 days after the check was actually received.
• Key authorities: IRC §§ 402(c)(3), 402(c)(4), 401(a)(9), and 6110(k)(3); Rev. Proc. 2003-16.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
201330047

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

APR 30 2013

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

U.I.L. 402.08-00

XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX

T:EP:RA:T3

Legend:
Taxpayer A = XXXXXXXXXXXXXXXXXX
Individual B = XXXXXXXXXXXXXXXXXXX
Plan X = XXXXXXXXXXXXXXXXXXX
IRA Y = XXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX
Company N = XXXXXXXXXXXXXXXXXXX
Amount A = XXXXXXXXXXXXXXXXXXX
Amount B = XXXXXXXXXXXXXXXXXXX
Amount C = XXXXXXXXXXXXXXXXAXXX

Dear XXXXXXXXXX:

This is in response to your request dated October 21, 2012, 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 represents that he received a distribution from Plan X totaling
Amount A. Taxpayer A asserts that his failure to accomplish a rollover within the
60-day period prescribed by section 402(c)(3) of the Code was due to the
medical condition and death of his mother, Individual B.

2 201330047

On December 6, 20 [illegible], Taxpayer A received a statement from Company N,
indicating the distribution of Amount A less Federal Income Tax withholding in
the amount of Amount B from Plan X for a net distribution of Amount C. Upon
receipt of the statement, Taxpayer A called his former employer, Company N,
and was informed that a check representing his investment in Plan X had been
mailed to him on December 2, 20 [illegible]. Taxpayer A represents that he told
Company N that he had never requested nor received the check that was mailed
to him on December 2, 20 [illegible]. On February 29, 20 [illegible], Company N re-issued the
check for the amount of Amount C. On March 30, 20 [illegible], Taxpayer A deposited
the full Amount A into IRA Y.

Taxpayer A further represents that he was the primary caregiver of Individual B
starting on August 13, 20 [illegible], until the death of Individual B on April 3, 20 [illegible].

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 A.

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) 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)(4) of the Code provides that an eligible rollover distribution shall
not include any distribution to the extent such distribution is required under
section 401(a)(9) of the Code.

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,

201330047

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 shows
that Amount A was successfully deposited into IRA Y within 60 days after the
check for Amount C was actually received by Taxpayer A. Therefore, a waiver of
the 60-day rollover period is denied since there is no need for a waiver. Provided
all other requirements of Code section 402(c)(3), were met with respect to the
contribution of Amount A into IRA Y on March 30, 20 [illegible], such contribution was a
valid rollover contribution within the meaning of section 402(c)(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.

If you wish to inquire about this ruling, please contact xxxxxXXXXXXXX at XXXXXXX.
Please address all correspondence to SE:T:EP:RA:T3.

Sincerely yours,

[signature]

Laura B. Warshawsky, Manager
Employee Plans Technical Group 3

Enclosures:

Deleted Copy of letter ruling
Notice of Intention to Disclose