IRS waived rollover deadline for family caregiving demands

Plain-English summary

An IRA owner took a distribution intending to move the funds to a bank closer to her home. During the rollover period, she and her husband traveled frequently to care for her father-in-law, who had severe dementia and could not care for himself or make decisions. She missed the deadline by a few days while preoccupied with those caregiving duties and promptly sought relief. The IRS waived the deadline under IRC § 408(d)(3)(I) and gave her 60 days from the ruling letter to contribute up to the distributed amount to a rollover IRA.

Ruling snapshot

• Question: Should the IRS waive the 60-day IRA rollover deadline when family caregiving demands impaired the taxpayer's ability to complete the rollover?
• Outcome: Approved, with 60 days from the ruling letter to complete the rollover
• Key authorities: IRC §§ 408(d)(1), 408(d)(3), and 401(a)(9); 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

MAR 01 2016

Uniform Issue List: 408.03-00

SE:T: EP: RA:T2

* * *
* * *
* * *

Legend:

Taxpayer A: = * * *
Individual B = * * *
IRA X = * * *
          * * *
Amount C = * * *

Dear * * *:

This is in response to your request dated October 1, 2015, as supplemented by
correspondence dated January 12, 2016 and February 16, 2016, in which you
requested 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 she received a distribution from IRA X totaling
Amount C. Taxpayer A asserts that her failure to accomplish a rollover within the 60-day
period prescribed by section 408(d)(3) was due to the medical condition of Individual B,
father-in-law of Taxpayer A, and her duties as his caregiver which impaired her ability to
accomplish a timely rollover. Taxpayer A further represents that Amount C has not been
used for any other purpose.

Taxpayer A received the distribution on July 29, 2015, with the intent of moving
the funds to an IRA at a bank closer to her home. During that time Individual B had
severe dementia and could not take care of himself or make decisions. Taxpayer A and
her husband were required to travel frequently to provide care to Individual B. Individual
B passed away on October 19, 2015.

Because Taxpayer A was preoccupied with the care she was required to provide
Individual B she did not realize she had missed the 60-day rollover period until a few
days after the period had expired. At that time, Taxpayer A prepared this ruling request.

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

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 Taxpayer A is
consistent with her assertion that the failure to accomplish a timely rollover was due to
the medical condition of Individual B, father-in-law of Taxpayer A, and her duties as his
caregiver which impaired her ability to accomplish a timely rollover

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 C from
IRA X. Taxpayer A is granted a period of 60 days from the issuance of this ruling letter
to contribute up to Amount C 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, the contribution up to Amount C 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.

If you wish to inquire about this ruling, please contact * * * (I.D. no. * * *) 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