Dementia supports waiver of the 60-day IRA rollover deadline

Plain-English summary

An IRA owner received a distribution but did not complete a rollover within 60 days. Medical records showed that she had dementia, needed help managing finances and records, and was impaired in her ability to complete the transfer. She represented that the distributed amount had not been used for another purpose. The IRS waived the deadline under IRC § 408(d)(3)(I) and gave her 60 days from the ruling date to contribute the amount to an IRA or another eligible retirement plan. The relief does not permit rollover of any required minimum distribution.

Ruling snapshot

• Question: Should the taxpayer receive a waiver of the 60-day rollover deadline because dementia impaired her ability to manage the transfer?
• Outcome: Approved, with 60 days from the ruling date to complete the rollover
• Key authorities: IRC §§ 408(d)(3)(A), (D), and (I); Rev. Proc. 2003-16

Full text (IRS public release)

Uniform Issue List: 408.03-00

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

APR 27 2016

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Legend:

Taxpayer A =
IRA X =
Amount 1 = $
Date 1 =

Dear:

This is in response to your request dated May 27, 2014, as supplemented by
correspondence dated December 12, 2014 and March 28, 2016, 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 she received a distribution from IRA X totaling
Amount 1. Taxpayer A asserts that her failure to accomplish a rollover within the 60-
day period prescribed by section 408(d)(3) of the Code was due to her declining mental
condition, with a diagnosed medical condition of dementia, which impaired her ability to
accomplish a timely rollover. The medical report states that Taxpayer A may need
assistance in managing finances and maintaining accurate records. Taxpayer A further
represents that Amount 1 has not been used for any purpose.

Based on the facts and representations, you request a ruling 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 distribution of Amount 1.

Section 408(d)(1) of the Code provides that, except as otherwise provided in
section 408(d) of the Code, any amount paid or distributed out of an Individual
Retirement Account (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) of the Code).

Section 408(d)(3)(B) of the Code provides that section 408(d)(3) of the Code
does not apply to any amount described in section 408(d)(3)(A)(i) of the Code 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) of the Code from an IRA which was not includible in gross income
because of the application of section 408(d)(3) of the Code.

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) of the Code do not apply to any amount required to be distributed under section

408(a)(6) 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. Only distributions that occurred 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) of the
Code, 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 the documentation submitted by Taxpayer A’s
authorized representative are consistent with her assertion that her failure to accomplish
a timely rollover was caused by a deliberating medical condition that impaired her ability
to manage her finances.

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 an IRA or other eligible retirement plan. 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 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 in
this ruling under the provisions of any other section of either the Code or regulations
which may be applicable.

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.

Pursuant to a power of attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

If you wish to inquire about this ruling, please contact (ID # )
at( ) - . Please address all correspondence to SE:T:EP:RA:T:A2.

Sincerely yours,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

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

cc: