Caregiver receives waiver of IRA rollover deadline

Plain-English summary

A taxpayer received property from an IRA but did not roll it over within 60 days because caring for his mother impaired his ability to complete the transaction on time. During the rollover period, his mother experienced serious medical problems and a worsening mental condition, and the taxpayer handled her daily care, finances, and search for a living facility. He documented those conditions and represented that the distributed property remained in his possession and had not been used for another purpose. The IRS waived the 60-day deadline under IRC § 408(d)(3)(I). The property would qualify as a rollover contribution if placed, in the same form received, into an IRA maintained by a tax-qualified trustee and all other rollover requirements were met.

Ruling snapshot

• Question: May the taxpayer receive a waiver of the 60-day IRA rollover deadline because caregiving duties impaired his ability to complete the rollover?
• Outcome: Approved
• Key authorities: IRC § 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

JAN 28 2016

T:EP:RA:T2

U.I.L. 408.03-00

XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX

Legend:

Taxpayer A = XXXXXXXXXX

Individual B = XXXXXXXXXX

IRA X = XXXXXXXXXX

Asset D = XXXXXXXXX

Date 1 = XXXXXXXXX

Dear XXXXXXXX:

This is in response to your letter dated June 3, 2014, as supplemented by
correspondence dated April 2, 2015, and an amended request dated December 5,
2015, in which you request a waiver of the 60-day rollover requirement contained in
section 408(d)(3) of the Internal Revenue Code (Code).

The following facts and representations have been submitted under penalty of perjury in
support of your request.

Taxpayer A represents that on Date 1, he received a distribution of Asset 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 due to his duties as caregiver for his
mother, Individual B, which impaired his ability to accomplish a timely rollover.
Taxpayer A further represents that Asset D, the property, he received as a distribution
from IRA X, is in his possession and has not been used for any other purpose.

2

Taxpayer A represents that prior to and during the 60-day rollover period Individual B
experienced numerous medical problems including a worsening mental condition.
During this time Taxpayer A, was required to assist with her daily medical needs, assist
in handling her financial affairs, and assist in locating a living facility for Individual B.
Taxpayer A provided copies of Individual B’s medical records that verify her medical
and mental condition.

Based on the facts and representations, Taxpayer A requests that the Internal Revenue
Service (Service) waive the 60 day rollover requirement with respect to the distribution
of Asset D.

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).

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).

3

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 and good conscience, including
casualty, disaster, or other events beyond the reasonable control of the individual
subject to such requirement. Only distributions that occur after December 31, 2001, are
eligible for the waiver under section 408(d)(3)(I) of the Code.

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, or
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 Taxpayer A’s assertion that his failure to accomplish a timely rollover was due to
his duties as caregiver for Individual B which impaired his ability to accomplish a timely
rollover of Asset D.

Therefore, pursuant to Code section 408(d)(3)(I), the Service hereby waives the 60-day
rollover requirement with respect to the distribution of Asset D from IRA X. 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 contribution of Asset D, in the same form as
Taxpayer A received it as a distribution from IRA X, will be considered a rollover
contribution within the meaning of section 408(d)(3) of the Code if rolled into an IRA
maintained by a tax qualified trustee.

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 that requested it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent.

4

If you have any questions regarding this letter, please contact xxxxxxxxxxxxxx, at
xxxxxxxxxx. All Correspondence should be addressed to SE:T:EP:RA:T:3.

Sincerely yours,

Carolyn E. Zimmerman, Acting Manager
Employee Plans Technical Group 3

Enclosures:

Deleted copy of letter ruling
Notice of Intention to Disclose