PLR 201344012: IRA rollover deadline waived after hospitalization

Plain-English summary

An IRA owner received a distribution and did not complete the rollover within the 60-day period because of hospitalization and recuperation. The IRS waived the 60-day requirement under section 408(d)(3)(I), provided that all other rollover requirements were met. The distribution had not been used for another purpose. The ruling did not authorize a rollover of amounts required to be distributed under section 401(a)(9), and it expressed no opinion on other tax treatment.

Ruling snapshot

• Question: Whether the IRS should waive the 60-day IRA rollover requirement after the taxpayer's hospitalization.
• Outcome: Approved
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE 201344012

WASHINGTON, D.C. 20224

TAX EXEMPT AND AUG 08 2013
GOVERNMENT ENTITIES
DIVISION
T:EP:RA:T3
U.I.L. 408.03-00
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
Legend:
Taxpayer A = XXXXXXXXXXXXXXXXX
IRA X = XXXXXXXXXXXXXXXXX,
Amount D = XXXXXXXXXXXXXXXXX
Bank B = XXXXXXXXXXXXXXXXX

Dear XXXXXXXXXXX:

This letter is in response to your request dated February 3, 2013, as supplemented by correspondence dated March 7, 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 (the “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 on October 29, 20 __, from IRA X totaling Amount D. Taxpayer A asserts that her failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3) of the Code was due to her hospitalization and recuperation during the 60 day rollover period. Taxpayer A further represents that Amount D has not been used for any other purpose.

201344012

Taxpayer A represents that she received a distribution of Amount D from IRA X on October 29,20 __, when the certificate of deposit in IRA X matured and on the same day deposited the funds into her checking account with Bank B.

Taxpayer A further represents that on December 3, 20 , she was transported to the emergency room at the hospital when her daughter discovered her in a total state of dementia. On December 10,20 ., Taxpayer A underwent surgery for a brain tumor. Taxpayer A remained hospitalized until December 13, 20, and was transferred to a rehabilitation center where she remained until December 23, 20 .. Due to her slow recuperation, her doctor stipulated that Taxpayer A remain in her daughter’s home and care until January 31, 20

Taxpayer A states that while recuperating at her daughter's home, on January 19,20 ,she remembered that she had not rolled over Amount D within the 60- day rollover period and contacted her accountant for advice.

Based upon 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 received 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)).

201344012

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 included 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 sections 408(d)(3)(A) and 408(d)(3)(D) of the Code where the failure to waive such requirement would be against equity and good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement. Only distributions that occur 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, 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 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 is consistent with her assertion that her failure to accomplish a timely rollover was due to her hospitalization and recuperation during the 60 day rollover 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 D. Provided all other requirements of Code section 408(d)(3), except the 60-day requirement, are met with respect to such contribution, the contribution of Amount D will be considered a 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.

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No opinion is expressed as to the tax treatment of the transactions described herein under the provisions of any other section of either the Code or regulations, which may be applicable thereto.

A copy of this letter is being sent to your authorized representative pursuant to a power of attorney on file in this office.

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent.

If you have any questions concerning this ruling, please contact xxxxxXxXxXxXxxx, at XXXXXXXXXXXXXX. Any correspondence should be addressed to SE:T:EP:RA:T3.

Sincerely yours,

La 4 ef

Laura B. Warshawsky, Manager
Employee Plans Technical Group 3
Enclosures:
Deleted copy of letter ruling |
Notice 437

CC: XXXXXXXXXXXXX