Fraud victim receives 60 days to complete an IRA rollover

Plain-English summary

A taxpayer withdrew money from a traditional IRA and failed to redeposit it within 60 days after being drawn into a fraud scheme. Scammers posing as a technology company and a bank persuaded the taxpayer and another person to wire funds, including the IRA distribution, to a cryptocurrency account. After the scam was discovered, government agencies recovered the transferred amount and the taxpayer deposited the recovered check into a bank account without using the IRA funds for another purpose. The IRS found the documentation consistent with a rollover failure caused by fraud and waived the original 60-day deadline under IRC § 408(d)(3)(I). It granted 60 days from the ruling date to contribute the IRA amount to a rollover IRA, provided all other rollover requirements are met. The ruling does not permit rollover of any required minimum distribution under IRC § 401(a)(9).

Ruling snapshot

• Question: May a fraud victim receive a waiver of the 60-day IRA rollover deadline?
• Outcome: Approved, with 60 days from the ruling date to contribute the recovered amount to a rollover IRA
• Key authorities: IRC §§ 401(a)(9), 408(d)(3); Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, DC 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Release Number: 202535015
Release Date: 8/29/2025 June 5, 2025

Uniform Issue List: 408.03-00

LEGEND:

Taxpayer A =
Taxpayer B =
IRA X =
Bank A =
Bank B =
Company A =
Company B =
Agency A =
Agency B =
Individual 1 =
Individual 2 =
Amount 1 =
Amount 2 =
Amount 3 =
Date 1 =
Date 2 =
Date 3 =
Date 4 =
Date 5 =
Date 6 =

Dear :
This is in response to your letter dated May 6, 2025, 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 A represents that on Date 2 [illegible] withdrew Amount 1 from IRA X, a
traditional IRA under section 408(a) of the Code. Taxpayer A asserts that [illegible] failure to
accomplish a rollover within the 60-day period prescribed by section 408(d)(3) was
because [illegible] was the victim of a fraud scheme.

Taxpayers A & B represent that on Date 1 they received an alert on their computer
and called what they thought was Company A. Taxpayer B spoke with Individual 1 who
falsely claimed to be a representative of Company A. Individual 1 conducted a scan on
their computer and told them that a virus had spread to their financial accounts and
directed them to contact Individual 2 with Bank A.

Individual 2 falsely represented himself as a representative of Bank A Taxpayers
A & B received a forged letter from Bank A. The letter informed them that Individual 2
was the only one they could trust and that all of their funds in Bank A were transferred
to secure locker accounts and would be returned after his investigation is complete.

Individual 2 convinced Taxpayers A & B to make three wire transfers of Amount
3 from various financial accounts into the cryptocurrency account of Company B with
Bank B. On Date 3, Taxpayer A, transferred Amount 2 (which included Amount 1 from
Taxpayer A’s IRA X) into the cryptocurrency account of Company B with Bank B.

Taxpayers A & B were in frequent contact with Individual 2 regarding the process
of their case. On Date 4 Taxpayers A & B were informed by Individuals 1 and 2 that the
investigation would be complete, and their funds would be returned. Taxpayers A & B
called Individuals 1 and 2 the next day to check on the progress to discover the contact
phone numbers for Individuals 1 and 2 were disconnected.

Taxpayers A & B realized on Date 5 that they were the victims of a scam and filed
reports with various governmental agencies, and Bank A. They requested Bank A
recall the wire transfer of Amount 2. They also contacted Agency A. Agency A enlisted
the assistance of Agency B and together they were able to secure Amount 2 from
Company B. On Date 6, Taxpayer A received Amount 2 that was recovered by Agency
B and deposited the check in Taxpayer A & B's account with Bank A. Taxpayer A
represents that Amount 1 has not been used for any other purpose.

Based on the above facts and representations, you request a ruling that the Internal
Revenue Service waive the 60-day rollover requirement contained in section 408(d)(3)
of the Code with respect to the distribution of Amount 1 from IRA X on Date 2.

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 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. Only distributions that occurred after December 31, 2001,
are eligible for the waiver under section 408(d)(3)(I) of the Code.

Section 3.02 of Revenue Procedure. 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 Taxpayer A is
consistent with [illegible] assertion that [illegible] failure to accomplish a timely rollover was caused
by [illegible] being a victim of a fraud scheme.

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 X.
Taxpayer A is granted a period of 60 days from the issuance of this ruling letter to
contribute Amount 1 into a rollover IRA. Provided all other requirements of section
408(d)(3) of the Code, except the 60-day requirement, are met with respect to such
contribution, 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 that are 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 is being sent to your authorized representative in accordance
with a power of attorney on file in this office.

If you wish to inquire about this ruling, please contact [illegible].

Sincerely,

Frederick L. Parker, Manager,
Employee Plans Technical Group 1
Enclosures:
Deleted copy of ruling letter
Notice of Intention to Disclose

Cc: