Self-directed investment error does not justify rollover waiver

Plain-English summary

An individual received an IRA distribution intending to move the money to a different investment but deposited it into a non-IRA investment. Several months later, while contacting another financial institution about a Roth IRA rollover, he discovered his mistake. He requested a waiver of the 60-day rollover deadline. The IRS explained that waivers address circumstances such as financial-institution error, death, hospitalization, postal error, incarceration, or disability. Because the individual did not identify any such factor that prevented a timely rollover, the IRS declined to waive the deadline.

Ruling snapshot

• Question: Could the individual receive a waiver after personally depositing an IRA distribution into a non-IRA investment?
• Outcome: Denied
• Key authorities: IRC § 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

SEP 19 2014

201450035

SE:T:EP:RA:T2

Uniform Issue List: 408:03:00

Legend:

Taxpayer =

IRA =

Amount =

Financial Institution A =

Financial Institution B =

Dear

This is in response to your request dated February 12, 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.

On October 9, 2012, Taxpayer received a distribution from Financial
Institution A with the intent to move the funds to a different investment. Taxpayer
deposited the funds into a non-IRA investment. In January 2013, Taxpayer
contacted Financial Institution B for the purpose of rolling over his Roth IRA. It
was at this point that Taxpayer discovered his error.

Based on the facts and representations, you request a ruling that the
Internal Revenue Service (the “Service”) waive the 60-day rollover requirement

2

201450035

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) 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 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)(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) 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.

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

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201450035

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 Service has the authority to waive the 60-day rollover requirement for
a distribution from an IRA where the individual failed to complete a rollover to
another IRA within the 60-day rollover period but was prevented from doing so
because of one of the factors enumerated in Rev. Proc. 2003-16; for example,
errors committed by a financial institution, death, hospitalization, postal error,
incarceration, and/or disability. In the present case, Taxpayer has not cited any
of the enumerated factors as reason for his failure to accomplish a rollover within
the 60-day period.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service
declines to waive the 60-day rollover requirement with respect to the distribution
of Amount from IRA.

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 wish to inquire about this ruling, please contact *. Please
address all correspondence to SE:T:EP:RA:2.

Sincerely yours,

Jason E. Levine, Manager
Employee Plans Technical Group 2

Enclosures:
Original deleted copy of ruling letter
Notice of Intention to Disclose