Determination 1339003: IRS declined a waiver of the 60-day IRA rollover rule

Plain-English summary

The IRS declined to waive the 60-day requirement for a taxpayer who withdrew money from an IRA and later tried to deposit it into a rollover IRA. The taxpayer said that Bank A failed to advise him about the rollover deadline, but the IRS found no evidence that Bank A had a duty to provide that advice. The IRS also found no evidence that a listed circumstance, such as a financial-institution error, hospitalization, disability, or postal error, prevented a timely rollover. Because the ability to redeposit the funds remained within the taxpayer's reasonable control, the waiver was denied.

Ruling snapshot

• Question: Could the taxpayer receive a waiver of the 60-day IRA rollover requirement under IRC § 408(d)(3)(I)?
• Outcome: Denied
• Key authorities: IRC §§ 408(d)(1), 408(d)(3), and 6110(k)(3); Rev. Proc. 2003-16

Full text (IRS public release)

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

TAX EXEMPT AND JUL 01 2013

GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00

201339003

T:EP:RA:T3

Legend:

Taxpayer A = ***

Bank A = ***

Bank B = ***

IRA X =

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:

Taxpayer A represents that he received a distribution from IRA X totaling Amount 1.
Taxpayer A asserts that his 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 him
of the rollover requirements.

201339003
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Taxpayer A represents that on May 2,20 he received Amount 1 from IRA X.
Subsequently, Taxpayer A shopped around at different financial institutions for more.
favorable interest rates.

On July 9,20. Taxpayer A opened a rollover IRA at Bank B. However, on July 13,

20. _ 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).

Section 408(d)(3)(D) of the Code provides a similar 60-day rollover period for partial
rollovers.

201339003
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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 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 him 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 his ability to timely rollover
Amount 1. The information presented indicates that the ability to redeposit Amount 1
into an 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.

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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201339003

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: ***