IRA rollover deadline waived after adviser gave six-month deadline

Plain-English summary

An IRA owner withdrew money after a financial adviser led him to believe he had six months to complete a rollover. He placed the amount first in a checking account and then in a savings account while researching IRA options, and he did not use it for another purpose. More than 60 days after the withdrawal, another institution told him the actual deadline and he promptly requested relief. The IRS found the documentation consistent with his account and waived the 60-day deadline under IRC § 408(d)(3)(I). He received 60 days from the ruling's issuance to complete the rollover, provided all other rollover requirements were met.

Ruling snapshot

• Question: May the taxpayer receive a waiver after relying on incorrect advice that the IRA rollover period was six months?
• Outcome: Approved. The taxpayer received 60 days from the ruling to complete the rollover.
• Key authorities: IRC §§ 72, 408(a)(6), 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

MAR 01 2017

Uniform Issue List: 408.03-00

Legend
Taxpayer A =

IRA B =

Financial Institution C =

Financial Institution D =

Financial Institution E =

Financial Institution F =

Amount 1 =

Dear :

This is in response to your request dated January 4, 2017, as supplemented by
correspondence dated February 13, 2017, 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”).

Taxpayer A represents that he received a distribution equal to Amount 1 from IRA
B, which was maintained by Financial Institution C. Taxpayer A asserts that his
failure to accomplish a rollover within the 60-day period prescribed by 408(d)(3)(A)
of the Code was due to a miscommunication with a financial advisor at Financial
Institution D.

Taxpayer A owned IRA B, which was invested in mutual funds. In July, 2016,
Taxpayer A met with a representative of Financial Institution D to discuss his
rollover options. Based on this conversation, Taxpayer A believed that he had six


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months in which to complete a rollover. On August 30, 2016, Taxpayer A
withdrew Amount 1 from IRA B and deposited Amount 1 into his checking account
with Financial Institution E while he researched his IRA options with other
institutions. On September 2, 2016, Taxpayer A transferred Amount 1 from his
checking account with Financial Institution E to his savings account with Financial
Institution E. On December 21, 2016, he contacted Financial Institution F to
discuss its IRA products and learned that the rollover period was 60 days rather
than six months. Taxpayer A promptly requested a ruling that the Service waive
the 60-day rollover requirement under section 408(d)(3) of the Code as to the
distribution of Amount 1 from IRA B. Taxpayer A represents that Amount 1 has
not been used for any other purpose.

Based on the above facts and representations, you request a ruling that the
Service waive the 60-day rollover requirement under section 408(d)(3) of the Code
as to the distribution of Amount 1 from IRA 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.

Section 408(d)(3) of the Code provides the rules applicable to IRA rollovers.

Section 408(d)(3)(A) of the Code provides that section 408(d)(1) 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 or 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).


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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 of the Treasury may
waive the 60-day requirement under sections 408(d)(3)(A) and 408(d)(3)(D) 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, provides that the Service will issue a ruling
waiving the 60-day rollover requirement in cases 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 taxpayer. 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 and documentation submitted are consistent with Taxpayer A’s
assertion that the failure to accomplish a rollover within the 60-day period
prescribed by 408(d)(3)(A) of the Code was due to a miscommunication with a
financial advisor at Financial Institution D.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service waives the 60-
day rollover requirement with respect to the distribution equal to Amount 1.
Provided all other requirements of section 408(d)(3), except the 60-day
requirement, will be met with respect to the contribution of Amount 1 to an IRA,
such contribution will be considered a rollover contribution within the meaning of
section 408(d)(3). Taxpayer A has 60 days from the issuance of this letter ruling
to complete the rollover of Amount 1 into an IRA.

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.


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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
at . Please address all correspondence to SE:T:EP:RA:T1.

Sincerely yours,

Carlton A. Watkins, Manager
Employee Plans Technical Group 1

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