Widow abroad during rollover period receives 60-day relief

Plain-English summary

A surviving spouse left the United States for family support after her husband's death. While she was abroad, his employer plan distributed his entire benefit to her, and the full 60-day rollover period expired before she returned and found the checks. She later rolled the net check amount into an IRA and requested relief for the full amount that had been eligible for rollover when distributed, excluding the required minimum distribution. The IRS found that she was outside the country and unaware of the distribution throughout the deadline period. It granted 60 days from the ruling date to contribute the eligible amount to an IRA or another eligible retirement plan.

Ruling snapshot

• Question: May the surviving spouse complete a late rollover of a plan distribution issued while she was abroad and unaware of it?
• Outcome: Approved. She received a new 60-day rollover period for the eligible amount.
• Key authorities: IRC §§ 401(a)(9) and 402(c)(3); Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY 201437026
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

JUN 19 2014

Uniform Issue List: 402.00-00

Legend:
Taxpayer =
Plan =

IRA =

Amount M =

Amount W =

Amount N =
Decedent =

Company =

Dear :

This is in response to a letter dated February 13, 2013, submitted on your behalf by your authorized representative, in which you request a waiver of the 60-day rollover requirement contained in section 402(c)(3)of the Code.

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

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Taxpayer received a distribution of Amount M from Plan. Taxpayer asserts that her failure to accomplish a rollover of Amount N within the 60-day period prescribed by section 408(d)(3) of the Code was due to the fact that her distribution and the entire 60-day rollover period occurred while Taxpayer was outside the United States and was unaware of the distribution until she returned to the United States. Taxpayer further represents that Amount has not been used for any other purpose.

Taxpayer was married to Decedent, who was employed by Company, the custodian of Plan. Decedent passed away on December 22, 2011. Grieving Decedent's death, and with no family left in the country, Taxpayer left the United States and traveled to her native country for family support from March 29 to October 16, 2012.

Decedent's account balance in Plan totaled Amount M. Plan distributed Decedent's entire benefit in Plan to Taxpayer on June 29, 2012, totaling Amount W, representing Amount M less withholding. Taxpayer only received the checks on October 16, 2012, when she returned from foreign travel and on December 13, 2012, rolled Amount W into IRA. Taxpayer proposes to rollover Amount N which would have been the amount eligible for rollover at the time Amount M was originally distributed (Amount M less a required minimum distribution).

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 402(c)(3) of the Code with respect to Amount N.

Section 402(c) of the Code provides that if any portion of the balance to the credit of an employee in a qualified trust is paid to the employee in an eligible rollover distribution, and the distributee transfers any portion of the property received in such distribution to an eligible retirement plan, and in the case of a distribution of property other than money, the amount so transferred consists of the property distributed, then such distribution (to the extent transferred) shall not be includible in gross income for the taxable year in which paid. Section 402(c)(3)(A) of the Code states that such rollover must be accomplished within 60 days following the day on which the distributee received the property. An individual retirement account constitutes one form of eligible retirement plan.

Section 402(c)(4) of the Code provides that an eligible rollover distribution shall not include any distribution to the extent such distribution is required under section 401(a)(9) of the Code.

Section 402(c)(3)(B) of the Code provides, in relevant part, that the Secretary may waive the 60-day requirement under section 402(c)(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.

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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 402(c)(3) 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 her assertion that her failure to accomplish a timely rollover was due to the fact that the distribution and the entire 60-day rollover period occurred after Taxpayer was outside the United States and unaware that a distribution had, in-fact, occurred.

Therefore, pursuant to section 402(c)(3)(B) of the Code, the Service hereby waives the 60-day rollover requirement with respect to the distribution of Amount N from Plan. Taxpayer is granted a period of 60 days from the issuance of this ruling letter to contribute Amount N into an IRA or other eligible retirement plan. Provided all other requirements of section 402(c)(3) of the Code, except the 60-day requirement, are met with respect to such contribution, the contribution of Amount N will be considered a rollover contribution within the meaning of section 402(c)(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.

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.

Pursuant to a power of attorney on file with this office, a copy of this letter ruling is being sent to your authorized representative.

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If you have any questions, please contact
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

Cc: