Caregiving crisis supports waiver of the 60-day IRA rollover deadline

Plain-English summary

An IRA owner took a distribution intending to roll it into another IRA. During the rollover period, his mother-in-law suffered a serious automobile accident, remained hospitalized, and later died while he and his spouse stayed with her and managed her care. He discovered the missed rollover only after returning home, and the distributed money had not been used for another purpose. The IRS found that the medical emergency and caregiving duties impaired his ability to complete the rollover on time and waived the deadline under IRC § 408(d)(3)(I). He received 60 days from the ruling date to contribute up to the distributed amount to a rollover IRA, subject to the other rollover requirements.

Ruling snapshot

• Question: Should the taxpayer receive a waiver of the 60-day IRA rollover deadline because a family medical emergency and caregiving duties prevented timely action?
• 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)

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

APR 26 2016

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

U.I.L. 408.03-00

Legend:
Taxpayer A =
Individual B =
IRA X =
Amount D =
Hospital T =
Facility U =
Hospital W =
Date 1 =
Date 2 =
Date 3 =
Date 4 =
Date 5 =

Dear:

This is in response to your letter dated July 23, 2015, as supplemented by
correspondence dated October 5, 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 (Code).

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

On Date 2, Taxpayer A received a distribution from IRA X totaling Amount D with the
intent to rollover Amount D into another IRA. 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 the medical condition of his mother-in-law, Individual B, and his duties
as caregiver during the 60-day rollover period which impaired his ability to accomplish a
timely rollover.

On Date 1, Individual B, Taxpayer A’s mother-in-law, was involved in a serious motor
vehicle accident and was med-flighted to Hospital T where she stayed in the intensive
care unit until Date 3 when she was transferred to Facility U. On Date 4, Individual B
was transferred to Hospital W where she passed away on Date 5. Taxpayer A
represents that during the 60-day rollover period, he and his spouse stayed with
Individual B looking after her care.

Medical documentation shows that during the 60-day rollover period, Individual B was
hospitalized and ultimately died as the result of an automobile accident.

When Taxpayer A and his spouse returned home after the death of Individual B,

Taxpayer A realized that Amount D was not rolled over within the 60-day rollover period.

Taxpayer A represents that Amount D has not been used for any other purpose.

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 Amount 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).

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 his assertion that his failure to accomplish a timely rollover was due to the medical
condition of Individual B and his duties as her caregiver during the 60-day rollover
period which impaired his ability to accomplish a timely rollover.

Therefore, pursuant to Code section 408(d)(3)(I), the Service hereby waives the 60-day
rollover requirement with respect to the distribution of Amount D from IRA X. Taxpayer
A is granted a period of 60 days from the issuance of the ruling letter to contribute an
amount not to exceed Amount D 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 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 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.

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

If you have any questions regarding this letter, please contact

at . All correspondence should be addressed to SE:T:EP:
RA:T:1.
Sincerely yours,
Carlton A. Watkins, Manager
Employee Plans Technical Group 1
Enclosures:

Deleted copy of letter ruling
Notice of Intention to Disclose

CC: