PLR 1347027: IRS waived the 60-day IRA rollover deadline because of the taxpayer's medical condition

Plain-English summary

The IRS waived the 60-day rollover requirement for an elderly taxpayer whose medical condition impaired his ability to manage his financial affairs. He received a distribution from an IRA, deposited it into a non-IRA account, and believed he had placed it into an IRA rollover account. Medical records and a physician's letter supported the finding that panic attacks and cognitive impairment prevented him from completing the rollover on time. The amount remained unused, and the IRS granted 60 days from the ruling date to contribute it to a rollover IRA, subject to the other rollover requirements. The ruling did not address other possible tax provisions or authorize rollovers of amounts required to be distributed under § 401(a)(9).

Ruling snapshot

• Question: Could the IRS waive the 60-day IRA rollover requirement under IRC § 408(d)(3)(I) because of the taxpayer's medical condition?
• Outcome: approved
• Key authorities: IRC §§ 408(d)(1), 408(d)(3), 408(d)(3)(I), 401(a)(9), and 6110(k)(3); Rev. Proc. 2003-16

Full text (IRS public release)

° DEPARTMENT OF THE TREASURY 20134 (027

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND AUG 13 2013

GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00

TEP. RALT|

XXXXXXKXKXKXXKXKKXK

XXXXXXXXXXXXKK

XXXXXXXKXXXXKXKXK

Legend:

Taxpayer A = XXXXXXXXXXXXXX
IRA B = XXXXXXXXXXXXXKX
Financial Institution C = XXXXXXXXXXXXXK
Bank D = XXXXXXXXXXXXKX
Amount 1 = XXXXXXXXXXXXKXXK
Dear XXXXXXXXXXXXXX:

This is in response to your request dated April 26, 2013, as supplemented by
correspondence dated July 3, 2013, from your authorized representative, in which you
requested a waiver of the 60-day rollover requirement contained in section 408(d)(3) of
the Internal Revenue Code (“Code”).

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

Taxpayer A, age 85, represents that he received a distribution from IRA B totaling
Amount 1. Taxpayer A asserts that his failure to accomplish a rollover within the 60-day
period prescribed by section 408(d)(3) was due to his medical condition, which impaired
his ability to manage his financial affairs. Taxpayer A further represents that Amount 1
has not been used for any other purpose.

Taxpayer A maintained IRA B, an individual retirement arrangement under section
408(d)(3) of the Code, with Financial Institution C. On December 21, 2012, Taxpayer A,

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based on something that he heard on television, contacted Financial Institution C and
requested that the balance of his IRA, Amount 1, be distributed directly to him.
Taxpayer A received a check from Financial Institution C totaling Amount 1 on
December 28, 2013, and, on that same day, went to Bank D and deposited it into a non-
IRA account. Taxpayer A represents he thought he had placed the money into an IRA
rollover account at Bank D.

Taxpayer A has suffered from panic attacks and cognitive impairment with short term
memory problems since 2011 and has been receiving treatment including both therapy
and medication. Taxpayer A has submitted medical records including a letter from his
physician documenting that his state of physical and mental health at the time of the
distribution and during the 60-day period following the distribution of Amount 1
prevented him from attending to his financial affairs, including completing a rollover.
Amount 1 remains in a non-IRA account with Bank D.

Based on the facts and representations, a ruling has been requested 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 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 60" 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 60" 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.

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

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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).

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 |.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)(1), 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 A is consistent
with his assertion that his failure to accomplish a timely rollover was caused by his
medical condition which impaired his ability to manage his financial affairs and
accomplish a timely rollover.

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 1 from IRA B.
Taxpayer A is granted a period of 60 days from the issuance of this ruling letter to
contribute Amount 1 into a Rollover IRA. Provided all other requirements of section
408(d)(3) of the Code, except the 60-day requirement, are met with respect to such
contribution, the contribution of Amount 1 will be considered a rollover contribution
within the meaning of section 408(d)(3) 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 ruling does not authorize the rollover of any amounts that are required to be
distributed by section 401(a)(9) of the Code.

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This letter is directed only to the taxpayer who requested it. Section 61 TOWIEE) © of the
Code provides that it may not be used or cited as precedent.

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

If you wish to inquire about this ruling, please contact XXXXXXXXXXX (ID XXXXXXXX)
at (XXX) XXX-XXXX. Please address all correspondence to SE:T:EP:RA:T1.

Sincerely,
Colt A. Weth.
Carlton A. Watkins, Manager

Employee Plans Technical Group 1

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