Husband’s death justified waiver of IRA rollover deadline

Plain-English summary

A taxpayer acting under a durable power of attorney withdrew funds from her seriously ill husband’s IRA to move them into safer IRA investments. Her husband died during the 60-day rollover period, and the financial institution then refused to establish a new IRA in his name. She was the sole beneficiary and had kept the distribution in a non-IRA savings account without using it for another purpose. The IRS concluded that the death caused the missed rollover and waived the deadline. The funds could be contributed to a rollover IRA established in the taxpayer’s own name if the other section 408(d)(3) requirements were met.

Ruling snapshot

• Request: Waive the 60-day deadline for an IRA distribution after the owner died during the rollover period
• Outcome: Approved; rollover permitted into an IRA in the surviving spouse’s name
• 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

JUL 22 2015                                      201542011

SE:T:EP:RA:T1

COMMISSIONER
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Uniform Issue List: 408.03-00

Legend

Taxpayer A =

Taxpayer B =

IRA C =

Account D =

Financial Institution E =

Financial Institution F =

Amount 1 =

Dear             :

This is in response to your letter dated March 2, 2015, 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.


201542011

Taxpayer A represents that on January 7, 2015, she requested a distribution of
Amount 1 from her husband's IRA, IRA C, an individual retirement account
described in section 408(a) of the Code. Taxpayer A asserts that her failure to
accomplish a rollover within the 60-day period prescribed by 408(d)(3)(A) was
due to the death of Taxpayer A’s husband, Taxpayer B, during the 60-day
rollover period.

Taxpayer B owned IRA C, which was maintained by Financial Institution E.
Taxpayer B established IRA C in 2004 and listed his spouse, Taxpayer A, as the
sole beneficiary of IRA C.

Taxpayer B suffered from a serious illness. Taxpayer A handled all of Taxpayer
B’s financial affairs pursuant to a durable power of attorney. Taxpayer A wanted
to transfer the assets of IRA C into more secure IRA investments. On January 7,
2015, Taxpayer A took a distribution of Amount 1 from IRA C and deposited
Amount 1 into Account D, a non-IRA savings account maintained by Financial
Institution F. On February 11, 2015, Taxpayer B died. On February 20, 2015, a
date within the 60-day rollover period, Taxpayer A attempted to reinvest Amount
1 in an IRA with Financial Institution E. However, Financial Institution E refused
to establish an IRA in Taxpayer B’s name because Taxpayer B was deceased.
Taxpayer A represents that she has not used the funds for any other purpose.

Based on the above facts and representations, Taxpayer A requests that the
Internal Revenue Service (the “Service”) waive the 60-day rollover requirement
with respect to the distribution of Amount 1 from IRA C.

Section 408(a) of the Code defines an IRA to mean a trust created or organized
in the United States, and requires that the trustee be a bank or an approved non-
bank trustee.

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.

Section 408(d)(3) of the Code 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 or 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


3 201542011

(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)(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 of the Treasury 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, provides that the Service will issue a
ruling waiving the 60-day rollover requirement in cases 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 taxpayer.
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 are
consistent with Taxpayer A’s assertion that the failure to complete a timely rollover of the distribution of Amount 1 from IRA C was due to Taxpayer B’s
death during the 60-day rollover period.


201542011

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service waives the
60-day rollover period with respect to the distribution of Amount 1 from IRA C.
Provided all other requirements of section 408(d)(3), except the 60-day
requirement, are met with respect to the contribution of Amount 1 into a rollover
IRA, the contribution of Amount 1 to an IRA established in the name of Taxpayer
A will be considered a rollover contribution within the meaning of section
408(d)(3).

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.

If you wish to inquire about this ruling, please contact
. Please address all correspondence to SE:T:EP:RA:T1.

Sincerely yours,
Carlton A. Watkins, Manager
Employee Plans Technical Group 1

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