Caregiving duties excuse one-day-late IRA rollover

Plain-English summary

An IRA owner withdrew funds intending to return them within the 60-day rollover period. He was caring for his mother, whose deteriorating health required help with oxygen, medications, medical visits, and household needs. He expected to return home before the deadline but had to remain with her for an extra day, then completed the rollover one day late. Based on the medical documentation and caregiving circumstances, the IRS waived the 60-day requirement under IRC § 408(d)(3)(I). The waiver applied only if all other rollover requirements were satisfied.

Ruling snapshot

• Question: Should the IRS waive the 60-day IRA rollover deadline when caregiving duties caused a one-day delay?
• Outcome: Approved, the late contribution may qualify as a rollover
• Key authorities: IRC §§ 72, 408(a)(6), 408(d)(3); Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE 201538028

WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

JUN 24 2015

U.I.L. 408.03-00
XXXXXXXXXXXXXX

XXXXXXXXXXXXXX
XXXXXXXXXXXXXX

Legend:

Taxpayer A = XXXXXXXXXXX
Individual B = XXXXXXXXXXX
IRA X = XXXXXXXXXXX
Amount D = XXXXXXXXXXX
Company C = XXXXXXXXXXX
City M = XXXXXXXXXXX
State S = XXXXXXXXXXX
Date 1 = XXXXXXXXXXX
Date 2 = XXXXXXXXXXX
Date 3 = XXXXXXXXXXX
Date 4 = XXXXXXXXXXX

Date 5 = XXXXXXXXXXX

201538028

Dear XXXXXXXXXX:

This is in response to your letter dated October 21, 2014, submitted on your behalf by
your authorized representative, in which you request a waiver of the 60-day rollover
requirement contained in section 408(d)(3) of the Internal Revenue Code (Code).

The following facts and representations have been submitted under penalty of perjury in
support of your request.

On Date 1, Taxpayer A received a distribution from IRA X totaling Amount D. Taxpayer
A asserts that his failure to accomplish a rollover within the 60-day period prescribed by
section 408(d)(3) of the Code was due to his involvement with the medical condition of
his mother, Individual B, and his duties as her caregiver which impaired his ability to
accomplish a timely rollover.

Taxpayer A is a caregiver for Individual B, his mother, whose health has continued to
deteriorate. Taxpayer A represents that prior to and during the 60-day rollover period
Individual B experienced numerous medical problems. During this time Taxpayer A, was
required to assist with her medical needs including ensuring she had an adequate
oxygen supply, picking up her medications, taking her to see her doctor, and other
household duties. Taxpayer A has provided a letter from Individual B’s doctor verifying
her condition.

On Date 1, Taxpayer A withdrew Amount D from IRA X with the intent to rollover the
funds back into IRA X within the 60-day rollover period. On Date 2, Taxpayer A was
expecting to return home and deposit Amount D into IRA X on Date 3, but he found
himself completely preoccupied with taking care of Individual B and was forced to stay
an extra day to take care of her.

On Date 4, one day after the expiration of the 60-day rollover period, Taxpayer A
returned home and rolled over Amount D into IRA X which Company C deposited on
Date 5.

Based on the facts and representations, Taxpayer A requests that the Internal Revenue
Service (Service) waive the 60 day rollover requirement 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), 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.

: 201538028

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 received 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 included 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).

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 and good conscience, including
casualty, disaster, or other events beyond the reasonable control of the individual
subject to such requirement. Only distributions that occur 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, 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, or
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.

201538028

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 medical
condition of Individual B and his duties as her caregiver which impaired his ability to
accomplish a timely rollover.

Therefore, pursuant to Code section 408(d)(3)(I), the Service hereby waives the 60-day
rollover requirement with respect to the distribution of Amount D 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 D into IRA X 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 that requested it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent.

A copy of this letter is being sent to your authorized representative pursuant to a Power
of Attorney on file with this office.

If you have any questions regarding this letter, please contact XXXXXXXXXXXXX, XXXXXXXXX,

at XXXXXXXXXXxXXX. All correspondence should be addressed to SE: T: EP: RA: T: 2.

Sincerely yours,

Sherri M. Edelman, Manager

Employee Plans Technical
Enclosures:

Deleted copy of letter ruling
Notice of Intention to Disclose

cc: XXXXXXXXXXXXXXX