IRS waives the 60-day IRA rollover deadline

Plain-English summary

The IRS waived the 60-day rollover requirement for a taxpayer who received a distribution from an individual retirement account. The taxpayer represented that an ongoing medical condition, worsened by a family death and unexpected job termination, impaired her ability to manage her financial affairs during the rollover period. The distributed amount had not been used for another purpose, and the taxpayer attempted to complete the rollover after her condition improved. The IRS granted 60 days from the ruling letter to contribute up to the distributed amount to an IRA, subject to the other rollover requirements.

Ruling snapshot

• Question: Can the taxpayer receive a waiver of the 60-day IRA rollover deadline because a medical condition prevented timely action?
• Outcome: Approved, the 60-day requirement was waived subject to the stated conditions
• Key authorities: IRC §§ 408(d)(3), 72, and 401(a)(9); Rev. Proc. 2003-16

Full text (IRS public release)

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

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

201410042

DEC 12 2013

Uniform Issue List: 408.03-00

LEGEND:

Taxpayer A

IRA B =

Custodian C =

Amount 1

Dear

This is in response to your letters of June 30, 2013, and September 14, 2013, in which you request 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 represents that she received a distribution of Amount 1 from her Individual Retirement Account (IRA), IRA B. Taxpayer A asserts that her failure to accomplish a rollover of Amount 1 within the 60-day period prescribed by section 408(d)(3) of the Code was due to a medical condition that impaired her ability to manage her financial affairs. Taxpayer A further represents that Amount 1 has not been used for any other purpose.

Taxpayer A represents that she received Amount 1, representing a total distribution of IRA B, on April 16, and May 8, 2013. The May 8, 2013 distribution represented final accrued interest in IRA B. Taxpayer A further represents that she intended to roll the distribution into an IRA at Custodian C.

201410042

Taxpayer A represents that she suffered from an ongoing medical condition, which worsened after the sudden and unexpected death of her mother-in-law, during the 60-day period. She also represents that while she was traveling to the funeral, her employer informed her that she had been terminated from her job. Taxpayer A represents that these stressful events exacerbated her medical condition and left her unable to function normally. She provided documentation from her doctor indicating that she has been under his care for this medical condition and that it can leave Taxpayer A extremely disabled and unable to function normally during severe symptomatic episodes.

Taxpayer A represents that after her condition improved, she attempted to rollover Amount 1 on June 20, 2013, but she was informed by Custodian C that the 60-day rollover period had expired.

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 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

201410042

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).

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).

Revenue Procedure 2003-16, 2003-4 I.R.B. 359 provides that in determining whether to grant a waiver of the 60-day rollover requirement under 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 or 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 is consistent with her assertion that her failure to accomplish a rollover of Amount 1 within the 60-day period was due to the exacerbation of an ongoing medical condition that impaired her ability to manage her financial affairs.

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 date of issuance of this ruling letter to contribute a sum up to Amount 1 into an IRA. Provided all other requirements of section 408(d)(3) of the Code, except the 60- day requirement, are met with respect to the contribution, Amount 1 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 amounts that are required to be distributed by section 401(a)(9) of the Code.

201410042

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 have any questions, please contact (I.D. # ) by phone at or fax at . Please address all correspondence to SE:T:EP:RA:T1.

Sincerely yours,

[signature]

Carlton Watkins, Manager
Employee Plans Technical Group 1

Enclosures:
Deleted Copy of Ruling Letter
Notice of Intention to Disclose