Surgery and medication support late rollover waiver

Plain-English summary

A taxpayer received a retirement-plan distribution intending to roll it into another IRA. During the 60-day period, she underwent surgery, took prescription pain medication, and experienced vertigo that impaired her ability to complete the rollover. She supplied medical documentation and represented that the distribution had not been used for another purpose. The IRS waived the deadline and gave her 60 days from the ruling to contribute the amount to a rollover IRA or another qualified plan.

Ruling snapshot

• Question: Could the taxpayer receive a waiver after surgery, medication, and vertigo prevented a timely rollover?
• Outcome: Approved
• Key authorities: IRC § 402(c)(3)(B); 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

JUN 17 2015

201537029

Uniform Issue List: 402.00-00

T:EP:RA:T2

Legend:
Taxpayer A: =

Plan X: =

Amount B =

This is in response to your letter, dated June 21, 2014, in which you requested a waiver of the 60-day rollover requirement contained in section 402(c)(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.

Taxpayer A represents that she received a distribution of Amount B on April 17, 2013 from Plan X. Taxpayer A asserts that her failure to accomplish a rollover within the 60 day period prescribed by section 402(c)(3) was due to her medical condition which impaired her ability to accomplish a timely rollover. Taxpayer further represents that Amount B has not been used for any other purpose. .

Taxpayer A received a distribution of Amount B on April 17, 2013 with the intention of rolling it over into another IRA. On May 23, 2013, during the rollover period, Taxpayer A was admitted to a hospital for surgery. Subsequent to the operation Taxpayer A was prescribed medication for pain and experienced vertigo which impaired her ability to complete the rollover within the 60 day rollover period. Taxpayer A has provided medical documentation certifying her surgery, medication and medical impairment.

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Based on the facts and representations, you request a ruling that the Internal Revenue Service (the “Service”) waive the 60 day rollover requirement with respect to the distribution of Amount B contained in section 402(c)(3)of the Code in this instance.

Section 402(c)(1) 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) states that such rollover must be accomplished within 60 days following the day on which the distributee received the property. An individual retirement account (IRA) constitutes one form of eligible retirement plan.

Section 402(c)(3)(B) of the Code provides, in relevant part, that the Secretary may waive the 60-day requirement under sections 402(c)(3)(A) 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 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 caused by a medical condition which prevented her from accomplishing the rollover during the 60 day rollover period.

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 B from Plan X. Taxpayer is granted a period of 60 days from the issuance of this ruling letter to contribute Amount B into a rollover IRA or another qualified 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 amount transferred (up to Amount B) 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.

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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:T2.

Sincerely yours,

A_

Sherri M. Edelman, Manager,
Employee Plans Technical Group 2

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