IRS waives the 60-day IRA rollover deadline

Plain-English summary

A taxpayer liquidated an IRA certificate of deposit and deposited the cashier's check into a regular checking account because he did not realize the certificate was held in an IRA. A miscommunication with a financial consultant contributed to the missed 60-day rollover deadline. The taxpayer did not use the distribution for another purpose and deposited it into a new IRA after the mistake was discovered during tax-return preparation. The IRS found the documentation consistent with the taxpayer's explanation and waived the deadline under section 408(d)(3)(I). The contribution qualified as a rollover if all other rollover requirements were met.

Ruling snapshot

• Question: Could the taxpayer receive a waiver of the 60-day deadline for rolling an IRA distribution into another IRA?
• Outcome: Approved, subject to all other rollover requirements.
• Key authorities: IRC §§ 72 and 408(d)(3); Rev. Proc. 2003-16.

Full text (IRS public release)

201641032
DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

JUL 14 2016

Uniform Issue List: 408.03-00
SE:T:EP:RA:T3

Legend:

Taxpayer A =
Amount B =
Bank W =

IRA X =

Financial Consultant M =

Brokerage Firm C =

IRA Y =

Dear

This is in response to your letter, dated November 3, 2015, as supplemented
by correspondence dated June 9, 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").

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The following facts and representations have been submitted under penalty
of perjury in support of the ruling requested.

Taxpayer A represents that he received a distribution from IRA X totaling
Amount B. Taxpayer A asserts that his failure to complete a rollover of Amount B,
within the 60-day period prescribed by section 408(d)(3) of the Code, was due to a
miscommunication with Financial Consultant M, of Brokerage Firm C,
about a maturing IRA CD (IRA X). Taxpayer A has not used Amount B for any other
purposes.

On November 8, 2013, Taxpayer A went to Bank W because the
certificate of deposit in IRA X became due. Taxpayer A was unaware that the
certificate of deposit was an individual retirement account. On November 8,
2013, Bank W issued a cashier's check payable to Taxpayer A to liquidate IRA
X. Taxpayer A immediately deposited the check into his regular checking
account. Taxpayer A contacted Financial Consultant M about the distribution
from IRA X.

Upon the preparation of Taxpayer A’s tax return and discussions
with Financial Consultant M, it became known to Financial Consultant M and
Taxpayer A that Amount B was in fact from an IRA account. Therefore, on April
15, 2014, Amount B was deposited as a rollover contribution into IRA Y, an
account maintained by Brokerage Firm C.

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 B.

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--

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(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
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 (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) 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 documentation submitted by Taxpayer A is
consistent with his assertion that his failure to accomplish a timely rollover of Amount
B was due to a miscommunication with Financial Consultant M, of
Brokerage Firm C, about a maturing IRA CD (IRA X).

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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 B
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 Amount B into IRA Y 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.

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.

If you wish to inquire about this ruling, please contact
Please address all

correspondence to SE:T:EP:RA:T1.

Sincerely yours,

Carlton A. Watkins

Carlton A. Watkins, Manager
Employee Plans Technical Group 1

Enclosures:
Deleted Copy of Ruling Letter
Notice of Intention to Disclose

CC: