PLR 201339002: IRS declines to waive the 60-day IRA rollover requirement

Plain-English summary

An individual received distributions from three IRAs and asked the IRS to waive the 60-day rollover deadline so the money could be deposited into a new rollover IRA. The individual said the delay resulted from a bank's failure to explain the rollover requirement, but also spent time comparing interest rates at different financial institutions. The IRS declined the waiver because the individual did not show that the bank had a duty to provide that advice or that an event outside the individual's reasonable control prevented a timely rollover. The distribution therefore did not qualify for the requested waiver under the facts presented.

Ruling snapshot

• Question: May the IRS waive the 60-day rollover requirement for distributions from three IRAs?
• Outcome: Denied. The IRS declined to waive the requirement.
• Key authorities: IRC §§ 72, 408(d)(1), 408(d)(3), 408(d)(3)(I); Rev. Proc. 2003-16

Full text (IRS public release)

201339002

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00

Legend:

Taxpayer A = ***

Bank A = ***

Bank B = ***

IRA X = ***

IRA Y = ***

IRA Z = ***

Amount 1 = ***

Dear ***:

This is in response to your request dated September 21, 2012, as supplemented by a letter dated November 26, 2012, 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 (the “Code”).

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

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Taxpayer A represents that she received a distribution from IRA X, IRA Y, and IRA Z totaling Amount 1. Taxpayer A asserts that her failure to accomplish a rollover within the 60-day period prescribed by section 408(d) of the Code was due to the failure of Bank A to advise her of the 60-day rollover requirements.

Taxpayer A represents that on May 2, 20 [illegible] she received distributions totaling Amount 1 from IRA X, IRA Y, and IRA Z. Subsequently, Taxpayer A shopped around at different financial institutions for more favorable interest rates.

On July 9, 20 [illegible] Taxpayer A opened a rollover IRA at Bank B. However, on July 13, 20 [illegible] Bank B informed Taxpayer A that Amount 1 could not be accepted as a rollover contribution because it was past the 60-day rollover period and returned the check for Amount 1 to Taxpayer A.

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 Individual Retirement Account (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).

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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 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 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 indicates that Taxpayer A withdrew Amount 1 from IRA X, IRA Y, and IRA Z with the intent to redeposit such funds at a later time into another IRA that would yield a better rate of return. However, Taxpayer A has not demonstrated that Bank A had a duty to inform her of the 60-day rollover requirement.

The Service has the authority to waive the 60-day rollover requirement for a distribution from an IRA where the individual failed to complete a rollover to another IRA within the 60-day rollover period but was prevented from doing so because of one of the factors enumerated in Revenue Procedure 2003-16, for example errors committed by a financial institution, death, hospitalization, postal error, incarceration, and/or disability. In this instance, Taxpayer A has not presented any evidence to the Service as to how any of the factors outlined in Rev. Proc. 2003-16 affected her ability to timely rollover Amount 1. The information presented indicates that the ability to redeposit Amount 1 into a rollover IRA within the 60-day rollover period was, at all times, within the reasonable control of Taxpayer A.

Under the circumstances presented in this case, the Service hereby declines to waive the 60-day rollover requirement with respect to the distribution of Amount 1 from IRA X, IRA Y, and IRA Z.

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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.

Pursuant to a power of attorney on file with this office, a copy of this letter ruling is being sent to your authorized representative.

If you wish to inquire about this ruling, please contact *** (ID# ) at ()-. Please address all correspondence to SE:T:EP:RA:T3.

Sincerely yours,

Laura B. Warshawsky, Manager
Employee Plans Technical Group 3

Enclosures:
Deleted copy of ruling letter
Notice of Intention to Disclose

CC: ***