Estate lacked proof that decedent intended an IRA rollover

Plain-English summary

An IRA owner withdrew funds into a checking account and died shortly afterward. His mother, acting as executrix, later moved the estate funds into her own checking account after a court-approved final distribution and requested a waiver of the 60-day rollover deadline. Although the documents showed that the decedent took the IRA distribution, no rollover IRA had been established and no signed documentation showed that he intended to complete a rollover. The IRS therefore found the evidence inadequate and declined to waive the deadline.

Ruling snapshot

• Request: Waive the 60-day IRA rollover deadline after the account owner’s death
• Outcome: Denied for lack of evidence of the decedent’s rollover intent
• Key authorities: I.R.C. § 408(d)(3); 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

201542010

U.I.L. 408.03-00                                      JUL 22 2015

XXXXXXXXXXXXXX
XXXXXXXXXXXXXX
XXXXXXXXXXXXXX
XXXXXXXXXXXXXX
XXXXXXXXXXXXXX                                      SE:T:EP:RA:T2

Legend:

Decedent A = XXXXXXXX
Taxpayer B = XXXXXXXX
IRA X = XXXXXXXX
Bank C = XXXXXXXX
Amount D = XXXXXXXX
Financial Institution E = XXXXXXXX
Court F = XXXXXXXX
State S = XXXXXXXX
Date 1 = XXXXXXXX
Date 2 = XXXXXXXX
Date 3 = XXXXXXXX
Date 4 = XXXXXXXX
Date 5 = XXXXXXXX
Date 6 = XXXXXXXX
Date 7 = XXXXXXXX

Dear xxxxxxxx:

This is in response to your request dated November 11, 2014, as supplemented by
correspondence dated February 12, 2015, and May 14, 2015, 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 (the “Code’).

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

Taxpayer B represents that Decedent A requested a distribution of Amount D from IRA
X with the intent to rollover Amount D into another rollover IRA with Bank C. Taxpayer B
asserts that Decedent A’s failure to accomplish a rollover within the 60-day period
prescribed by section 408(d)(3) of the Code was due to his death.

Taxpayer B represents that Decedent A was not happy with the rate of return on IRA X
and on Date 1, Decedent A requested a distribution of Amount D from IRA X to be wired
to his Bank C checking account.

On Date 2, Financial Institution E wired Amount D to Decedent A’s Bank C checking
account. On Date 3, Decedent A was found dead. On Date 4, Taxpayer B, mother of
Decedent A, was appointed executrix of Decedent A’s estate under the laws of State S.
On Date 5, Bank C closed Decedent A's checking account and Amount D was
transferred to a new account at the same bank, Bank C, in the name of Decedent A’s
estate.

On Date 6, Court F issued an order approving the final distribution from Decedent A’s
estate. On Date 7, pursuant to the Court order, Taxpayer B closed the account at Bank
C which was established in the name of Decedent A’s estate and transferred the
balance in the estate’s checking account into a checking account in her own name at
the same bank, Bank C.

Taxpayer B represents that she could not complete the rollover because she was
unaware of the distribution of Amount D from IRA X until she received a Form 1099-R
issued to Decedent A from Financial Institution E in February 2014.

Based on the foregoing facts and representations, you request that the Internal
Revenue Service (the “Service”) waive the 60-day rollover requirement contained in
section 408(d)(3) of the Code with respect to 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 shail 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.


3 201542010

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 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, 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,
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.

Taxpayer B has not presented adequate evidence to the Service that shows Decedent
A’s intent to roll over Amount D from IRA X into a rollover IRA. The information
presented and the documentation Taxpayer B has submitted is consistent with her
assertion that Decedent A took a distribution totaling Amount D from IRA X, but no
rollover IRA was established and there was no documentation signed by Decedent A
showing his intent to establish a rollover IRA.


4 201542010

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service hereby declines to

waive the 60-day rollover requirement with respect to the distribution of Amount D from
IRA X.

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 transactions described herein
under the provisions of any other section of either the Code or regulations, which may
be applicable thereto.

A copy of this letter is being sent to your authorized representative pursuant to a power
of attorney on file in this office.

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 have any questions concerning this ruling, please contact xxxxxxx, XXXXXXx, at
XXXXXXXXXXX. All correspondence should be addressed to SE:T:EP:RA:T2.

Sincerely yours,

Sherri M. Edelman, Manager
Employee Plans Technical

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