Sixty-day IRA rollover waiver denied for unsupported bank error

Plain-English summary

An IRA owner withdrew an amount from an IRA and did not return it to an IRA within 60 days. He said he mistakenly believed the withdrawal was required, was not advised by the bank about the tax consequences, and had increasing difficulty managing financial matters because of age-related fatigue, confusion, and memory impairment. The IRS found that the submitted information did not show that the bank caused the missed deadline or that the taxpayer intended to complete a rollover. It also found that the documentation did not establish any of the waiver factors listed in Rev. Proc. 2003-16. The IRS therefore declined to waive the 60-day rollover deadline.

Ruling snapshot

• Question: Would the IRS waive the 60-day deadline for rolling the IRA distribution into another IRA?
• Outcome: Denied
• Key authorities: IRC §§ 72, 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

201550049

U.I.L. 408.03-00 SEP 18 2015
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Legend:

Taxpayer A = xxxxxxxxxx
IRA X = xxxxxxxxxx
Bank C = xxxxxxxxxx
Amount D = xxxxxxxxxx
Amount E = xxxxxxxxxx
Date 1 = xxxxxxxxxx
Date 2 = xxxxxxxxxx

Dear xxxxxxxxx:

This is in response to your request dated March 31, 2015, as supplemented by
correspondence dated July 21, 2015, July 23, 2015, August 11, 2015, and August 13,
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 A represents that on Date 1, he withdrew Amount D from IRA X. Taxpayer A
asserts that his failure to accomplish a rollover within the 60-day period prescribed by
section 408(d)(3) of the Code was that he was not advised by Bank C of the tax
consequences of the withdrawal of Amount D from IRA X.

Taxpayer A represents that he annually withdraws the required minimum distribution
from IRA X. On Date 1, Taxpayer A withdrew Amount D from IRA X and deposited

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Amount D into his checking account with Bank C. On Date 2, Taxpayer A withdrew
Amount E from his checking account and deposited Amount E in a separate checking
account with Bank C.

Taxpayer A represents that he made these withdrawals on a mistaken belief that he
was required to do so by the rules of the Code applicable to Individual Retirement
Accounts (IRAs). Taxpayer A further represents that he was not advised by Bank C of
the tax consequences of the withdrawal from IRA X. Taxpayer A first became aware of
the tax consequences of withdrawal of Amount D from IRA X when his 20__ federal tax
return was being prepared.

Taxpayer A represents that he is not sophisticated with respect to financial matters and
as he has gotten older, his ability to adequately manage his financial affairs has become
increasingly difficult because of his lack of energy, mental confusion, and memory
impairment.

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 the withdrawal of Amount D from IRA X.

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 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).

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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.

The information presented and documentation submitted by Taxpayer A do not support
the assertion that Taxpayer A’s failure to accomplish a timely rollover was any fault of
the bank. Taxpayer A has not presented adequate evidence to the Service that shows
his intent to rollover Amount D from IRA X into a rollover IRA. Further, the
documentation submitted does not demonstrate that Taxpayer A failed to accomplish a
rollover due to any of the factors cited in Rev. Proc. 2003-16.

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.

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If you have any questions concerning this ruling, please contact xxxxxxxxxxxxx, at
xxxxxxxxxxxxxxxx. All correspondence should be addressed to SE:T:EP:RA:T:2.

Sincerely yours,

Sherri M. Edelman, Manager
Employee Plans Technical
Enclosures:
Deleted copy of letter ruling
Notice of Intention to Disclose

cc:
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