Caregiving abroad supports IRA rollover waiver

Plain-English summary

An IRA owner withdrew funds and deposited them in a non-IRA account in another country shortly before traveling there to care for his elderly mother after a serious fall. He remained abroad as her caregiver beyond the 60-day rollover period, and the money was not used for another purpose. The IRS found the documentation consistent with an event beyond his reasonable control. It waived the rollover deadline and granted 60 days from the ruling to contribute the amount to a rollover IRA.

Ruling snapshot

• Question: Could an IRA owner receive a rollover waiver because caring for his seriously injured mother abroad kept him away throughout the rollover period?
• Outcome: Approved
• 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

201545033

COMMISSIONER
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

AUG 11 2015

Uniform Issue List: 408.03-00

T:EP:RA:1

Legend

Taxpayer A =

IRA B =

Company C =

Bank D =

Country M =

Amount 1 =

Dear :

This is in response to your letter dated March 11, 2015, as supplemented by correspondence dated June 4, 2015, submitted on your behalf through 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 A represents that on October 7, 2014, he received a distribution equal to Amount 1 from IRA B, an individual retirement account (“IRA”) described in section 408(a) of the Code. Taxpayer A asserts that his failure to accomplish a rollover within the 60-day period prescribed by 408(d)(3)(A) was due to caring for his mother who was recovering from a serious injury during the rollover period.

Taxpayer A was the owner of IRA B, which was maintained by Company C. On October 7, 2014, Taxpayer A received a distribution of Amount 1 from IRA B. On October 9, 2014, Taxpayer A traveled to Country M to help care for his mother who was elderly and had been seriously injured in a fall. On October 10, 2014, Taxpayer A deposited Amount 1 into a non-IRA account with Bank D, which was located in Country M.

Taxpayer A had intended to return to the United States on October 30, 2014, however, he remained in Country M as the caregiver for his mother. Taxpayer A’s mother improved and on December 25, 2014, after the expiration of the 60- day rollover period, Taxpayer A returned to the United States. Subsequently, Taxpayer A returned to Country M when his mother passed away.

Taxpayer A represents and the documentation submitted shows that Amount 1 has not been used for any other purpose.

Based on the above facts and representations, Taxpayer A requests that the Service waive the 60-day rollover requirement with respect to the distribution of Amount 1 from IRA B.

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

(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 rollover of the distribution of Amount 1 from IRA B was due to Taxpayer A’s caring for his mother who was recovering from a serious injury during the 60-day rollover period.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service waives the 60-day rollover requirement with respect to the distribution of Amount 1 from IRA B. Taxpayer A is granted a period of 60 days from the issuance of this letter ruling to contribute Amount 1 into a rollover IRA. 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, such contribution 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.

Pursuant to a power of attorney on file with this office, a copy of this letter ruling is being sent to your authorized representative.

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

Cc: