PLR 1345039: IRS waives the 60-day IRA rollover deadline after a mistaken deposit

Plain-English summary

The IRS waived the 60-day IRA rollover requirement for part of a taxpayer's distribution. The taxpayer had repeatedly reinvested IRA assets in consecutive 12-month IRA certificates of deposit, but mistakenly deposited the distribution into a regular, non-IRA certificate of deposit. The taxpayer established a consistent prior practice and intended to continue the IRA rollover. The IRS granted 60 days from the ruling date to contribute the specified amount to an IRA, provided the other rollover requirements were met. The ruling does not authorize rollovers of amounts required to be distributed under section 401(a)(9).

Ruling snapshot

• Question: May the taxpayer complete a rollover after mistakenly placing the distribution in a non-IRA certificate of deposit?
• Outcome: Approved, the 60-day requirement was waived for the specified amount.
• Key authorities: IRC §§ 401(a)(9), 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

201345039

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

AUG 14 2013

Uniform Issue List: 408.03-00 T.EP:RA:T2

Legend:
Taxpayer = ***
IRA X = ***
Amount A = ***
Amount B = ***
Financial Institution A = ***
Financial Institution B = ***

Dear ***:

This is in response to your request dated November 6, 2012, as supplemented by
correspondence dated April 3, June 17, and July 22, 2013, 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 represents that he received a distribution from IRA X totaling Amount A.
Taxpayer had invested Amount A in IRA X in a 12-month certificate of deposit ("CD")
and he asserts that he had intended to roll over Amount A into another 12-month IRA
CD when it matured, as he had consistently done with Amount A with prior IRA CDs, but
his failure to accomplish a rollover within the 60-day period prescribed by section
408(d)(3) of the Code was due to his depositing the money in a non-IRA CD by mistake
and contrary to his established intent.

Taxpayer maintained IRA X with Financial Institution A and invested IRA X in a
12-month IRA CD on May 27, 2010. The assets in IRA X were originally distributed
from another IRA and previously had been invested in a series of consecutive 12-month
IRA CDs with timely rollovers to the next upon maturation of the previous 12-month IRA
CD. On May 27, 2011, Taxpayer took a full distribution of Amount A from IRA X upon
maturation of the 12-month IRA CD and, as he had done in the past, he intended to
deposit it into another IRA CD with Financial Institution B. However, he mistakenly
deposited it into a regular non-IRA CD on June 6, 2011. By the time Taxpayer became
aware of the error, the 60-day rollover period had expired.

A 12-month IRA CD requires that it be reinvested every year when it matures.
Taxpayer has represented and established through submitted documentation a
consistent practice for many years of rolling over the IRA assets into a new IRA CD
when the prior IRA CD matured.

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 a portion of the distribution of Amount A, specifically, Amount B.

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.

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) 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.

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) (related to
required distributions under section 401(a)(9) and incidental death benefit requirements
of section 401(a)).

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) 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.

Revenue Procedure 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) 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, 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 is consistent with
his assertion that he intended to roll over Amount A when his 12-month IRA CD had
matured, but that his failure to accomplish a timely rollover was caused by depositing
Amount A into a regular non-IRA CD by mistake and contrary to his established intent
and previous practice.

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 A from IRA X.
Taxpayer is granted a period of 60 days from the issuance of this ruling letter to
contribute Amount B into an IRA. Provided all other requirements of section 408(d)(3),
except the 60-day requirement, are met with respect to such contribution, Amount B will
be considered a rollover contribution within the meaning of section 408(d)(3).

This ruling does not authorize the rollover of amounts that are required to be distributed
by section 401(a)(9) of the Code (regarding required distributions).

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 * * * * * * * * * * * at ( * )

• • • • • • • *. Please address all correspondence to SE:T:EP:RA:T2.

Sincerely yours,

[illegible signature]
Jason Levine, Manager,
Employee Plans Technical Group 2

Enclosures:

Deleted copy of ruling letter

Notice of Intention to Disclose