PLR 1348018: IRS waives the 60-day IRA rollover requirement

Plain-English summary

An elderly taxpayer received an IRA distribution and intended to roll it into another IRA, but the receiving bank opened a non-IRA account instead. The IRS concluded that the failure to complete the rollover within 60 days resulted from the financial institution's failure to follow the taxpayer's instructions. It waived the 60-day requirement under IRC § 408(d)(3)(I), provided the other rollover requirements were met, and treated the contribution as a valid rollover. The ruling did not authorize rollovers of amounts required to be distributed under IRC § 401(a)(9).

Ruling snapshot

• Question: Could the IRS waive the 60-day rollover requirement for the distribution from the taxpayer's IRA?
• Outcome: approved
• Key authorities: IRC §§ 72, 401, and 408; Rev. Proc. 2003-16

Full text (IRS public release)

201348018

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

SEP 05 2013
Uniform Issue List: 408.03-00 T:EP:RA:T1
XXXXXXKXKXXXXKXX
XXXKXXXKXKXKXXXKXKX
XXXXXXXXXXKXKXX
Legend:
Taxpayer A XXXXXXXXKXXXKKXXKX
IRA B XXXXXXXXKXXXKKX
Bank C XXXXXXXKXKXKXKXKKX
Account D XXXXXKXXKXKXKXKXKKXK
Bank E XXXKXKXKKXKXKXXKKXKKX
Amount 1 XXXXXXXXKXXKXKKK
Dear XXXXXXXXXXXXKXX:

This is in response to your submission dated March 9, 2013, as supplemented by
correspondence dated May 19, June 5, and July 8, 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 A, age 86, represents that she received a distribution from IRA B totaling
Amount 1. Taxpayer A asserts that her failure to accomplish a rollover of Amount 1
within the 60-day period prescribed by section 408(d)(3) was due to the failure of Bank
E to follow Taxpayer A’s instructions. Taxpayer A also represents that Amount 1 has
not been used for any other purpose.


201348018

Page 2

Taxpayer A represents that she owned IRA B, which was invested in a Certificate of
Deposit (CD) maintained by Bank C. Upon maturity of the CD, Taxpayer A decided to
invest in an IRA with Bank E. On May 12, 20 __, Taxpayer A received a distribution of
Amount 1 from IRA B with Bank C. Taxpayer A was told by representatives of Bank C
of the 60-day rollover requirement and specifically what she should tell representatives
of Bank E. Taxpayer A immediately went to Bank E and told representatives of Bank E
that her intent was to open a retirement account and that this was a rollover from an IRA
account. At that time, Bank E opened Account D and provided Taxpayer A with a
screenshot from their webpage showing her new account. Taxpayer A left Bank E
believing that she had properly rolled over Amount 1 into an IRA account. In November
20, upon receipt of an IRS Form CP-2000, Taxpayer A became aware that Account D
was a non-IRA account.

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 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 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

201348018

Page 3

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 section 408(d)(3)(A) 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 documentation submitted by Taxpayer A is consistent
with her assertion that her failure to accomplish timely rollover was due to the failure of
Bank E to follow her instructions, which resulted in Amount 1 being deposited into
Account D, a non-IRA account.

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.
Provided all other requirements of section 408(c)(3) of the Code, except the 60-day
requirement, are met with respect to such contribution, the contribution of Amount 1 into
an IRA will be considered a valid rollover contribution within the meaning of section
408(d)(3) of the Code.

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


201348018

Page 4

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 XXXXXXXXXX by phone at (XXX)
XXX-XXXX. Please address all correspondence to SE:T:EP:RA:T1.

Carlton Watkins, Manager
Employee Plans Technical Group 1

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