Death within rollover period supports IRA waiver

Plain-English summary

An IRA owner withdrew an amount and died after a sudden brief illness before the 60-day rollover period expired. The owner's will appointed an executrix, and submitted documentation indicated that the owner had intended to return the amount to the IRA within the deadline. The IRS concluded that the death caused the failure to complete the rollover on time. It waived the deadline and gave the executrix 60 days from the ruling to contribute the amount to the IRA, assuming the other rollover requirements were met.

Ruling snapshot

• Question: Would the IRS waive the 60-day rollover deadline when an IRA owner died within the original rollover period?
• Outcome: Approved, the executrix received 60 days from the ruling to contribute the amount to the IRA.
• Key authorities: IRC §§ 72, 401(a)(9), and 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

DEC 16 2015

Uniform Issue List: 408.03-00

Legend:

Executrix =

Decedent =

IRA A =

Financial Institution B =

Amount 1 =

Dear Ms.                 :

This is in response to your request dated May 1, 2015, as supplemented by
correspondence dated July 6, August 3, September 9 and September 16, 2015,from
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:

Executrix represents that Decedent received a distribution equal to Amount 1
from IRA A. Executrix asserts that Decedent's failure to accomplish a rollover within the
60-day period prescribed by section 408(d)(3) of the Code, was due to Decedent's
death within the 60-day period.

Decedent maintained IRA A with Financial Institution B. On March 4, 2015,
Decedent withdrew Amount 1 from IRA A. After a sudden brief illness, Decedent died
on April 5, 2015. Under the terms of Decedents Last Will and Testament, Executrix was
appointed. Documentation submitted by Taxpayer A, indicates that Decedent clearly
intended to complete a rollover Amount 1 back into IRA A within the 60-day period.

Based on the facts and representations, you request a ruling that the Service
waive the 60-day rollover requirement contained in section 408(d)(3) of the Code with
respect to the distribution of Amount 1.

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.

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 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 408(d)
do not apply to any amount required to be distributed under section 401(a)(9) of the
Code.

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 (January 27, 2003) 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.

The information presented and documentation submitted by Executrix is
consistent with her assertion that the failure to accomplish a timely rollover was caused
by Decedent's death within the 60-day period.

Therefore, pursuant to section 408(d)(3)(I) of the code, the Service hereby
waives the 60-day rollover requirement with respect to the distribution of Amount 1 from
IRA A. Executrix is granted a period of 60 days from the issuance of this ruling letter to
contribute Amount 1 to IRA A. Provided all other requirements of section 408(d)(3) of
the Code, except the 60-day requirement, are met with respect to such contribution, the
amount transferred (up to Amount 1) 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 required to be distributed
by section 401(a)(9) 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.

A copy of this letter has been sent to your authorized representative in
accordance with a power of attorney on file with this office.

If you wish to inquire about this ruling, please contact ******* at *******.
Please address all correspondence to SE:T:EP:RA:T2.

Sincerely yours,

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

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

CC: