Caregiving and hospitalization support rollover waiver

Plain-English summary

A taxpayer withdrew his entire IRA balance intending to find another IRA with a better return. During the rollover period, his wife developed serious health problems, he became her full-time caregiver, and the stress caused him to need medical care and medication himself. His wife was then hospitalized until two business days before the deadline, and the taxpayer never cashed or deposited the distribution check. The IRS found that these health and caregiving circumstances explained the missed deadline. It waived the 60-day requirement and gave the taxpayer another 60 days to transfer the distribution to an IRA.

Ruling snapshot

• Question: Would the IRS waive the 60-day IRA rollover deadline because caregiving duties and the taxpayer's wife's hospitalization prevented a timely rollover?
• Outcome: Approved
• Key authorities: IRC § 408(d)(3)(I); Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY 201449008
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

SEP 10 2014

Uniform Issue List: 408.03-00

T:EP:RA:T3

Legend:

Taxpayer A =

IRA X =

Amount D =

Dear :

This is in response to your request dated March 12, 2014, 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”).

Taxpayer A represents that he took a full distribution from his IRA X, which
totaled Amount D, with the intention of finding another Individual Retirement Account
(“IRA”) with a better rate of return. Taxpayer A represents that he was unable to rollover
such amounts within the 60-day rollover period due to the need to attend to his wife’s
health issues, including her hospitalization for several weeks during the rollover period.

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

Taxpayer A withdrew Amount D from IRA X on November 22, 2013, intending to
roll it over into a new IRA with a better rate of return. However, Taxpayer’s wife
suffered numerous health issues, and in December 2013, he became her primary full-
time caregiver. His duties in caring for his wife became so overwhelming and stressful
that Taxpayer A required medical assistance and medication himself. On December 30,
2013, Taxpayer A’s spouse was hospitalized and remained in the hospital for several

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weeks. Taxpayer A’s spouse was released from the hospital on January 17, 2014, only
2 business days before the expiration of the 60-day rollover period. Taxpayer A never
cashed or deposited the check for the distribution from 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 D.

Section 408(d)(1) of the Code provides that, except as otherwise provided in
section 408(d) of the Code, 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) of the Code
does not apply to any amount described in section 408(d)(3)(A)(i) of the Code 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) of the Code from an IRA which was not includible in gross income
because of the application of section 408(d)(3) of the Code.

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) of the Code do not apply to any amount required to be distributed under section
408(a)(6) of the Code.

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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) 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 A is
consistent with his assertion that his failure to accomplish a timely rollover was due to
the health issues of his wife and himself, including her hospitalization at the end of the
rollover period.

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 D from
IRA X. Taxpayer A is granted a period of 60 days from the issuance of this ruling letter
to transfer Amount D to an 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 D will be considered a 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 408(a)(6) 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.

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If you wish to inquire about this ruling, please contact (ID ) at ( )

• . Please address all correspondence to SE:T:EP:RA:T3 .

Sincerely yours,

Laura B. Warshawsky, Manager,
Employee Plans Technical Group 3

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