IRS waives the 60-day IRA rollover requirement after a wiring error

Plain-English summary

The IRS waived the 60-day rollover requirement for a taxpayer who attempted to return an IRA distribution within the required period. The taxpayer initiated a wire transfer based on a belief about the deadline, but the transfer was rejected because the financial institution provided incorrect wiring instructions. The taxpayer received the correct instructions the same day and deposited the amount into the IRA, where it remained. The IRS found that the documentation supported the taxpayer's assertion that a financial institution error caused the missed deadline. The contribution was treated as a valid rollover, assuming all other rollover requirements were met.

Ruling snapshot

• Question: Should the IRS waive the 60-day rollover requirement after the taxpayer's wire transfer was rejected because of incorrect instructions?
• Outcome: Approved
• Key authorities: IRC §§ 401(a)(9), 408(d)(1), 408(d)(3), 408(d)(3)(I); Rev. Proc. 2003-16

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES

DIVISION
Uniform Issue List: 408.03-00

Legend:
Taxpayer = ***
IRA X = **** **
*** ** **
Financial Institution A = ****
Financial Institution B = ****
Date 1 = ***
Date 2 = ***
Date 3 = ***
Date 4 = ***
Amount = ***

**.
Dear ****:

This is in response to your request dated August 28, 2013, as supplemented by
correspondence dated October 23, 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 penalties of perjury
in support of the ruling requested:

201411049

Page 2

Taxpayer represents that he received a distribution of Amount from IRA X, which was
maintained with Financial Institution A, on Date 1, with the intent to return the funds into
IRA X within the 60-day rollover period. On Date 2, Taxpayer initiated a wire transfer of
Amount to IRA X to redeposit the funds he had withdrawn based upon his belief that the
60-day rollover period ended on Date 2. The wire transfer was rejected on Date 3 due
to incorrect wiring instructions provided by Financial Institution A. On the same day,
Taxpayer received the proper wiring instructions and Amount was deposited into IRA X.
On Date 4, a representative of Financial Institution A informed Taxpayer that he had
missed the 60-day rollover period. Taxpayer represents that Amount remains in IRA X.

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.

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) of the Code).

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 minimum distributions under section 401(a)(9) of the Code and incidental death
benefit requirements of section 401(a) of the Code).

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 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 the documentation submitted by Taxpayer provides
evidence that supports Taxpayer’s assertions that an error occurred in calculating the
60-day rollover period, which caused him to fail to accomplish a timely rollover of
Amount.

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 from IRA X.
Provided all other requirements of section 408(d)(3) of the Code, except the 60-day
requirement, were met with respect to such contribution, the contribution of Amount on
Date 3, 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 (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.

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If you wish to inquire about this ruling, please contact * * at () *** ****.
Please address all correspondence to SE:T:EP:RA:T2.

Sincerely yours,

Jason E. Levine, Manager,
Employee Plans Technical Group 2

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