IRA rollover deadline waived after unauthorized withdrawals

Plain-English summary

A taxpayer's spouse repeatedly withdrew three distributions from her IRA without her knowledge or consent. After discovering the withdrawals, she contacted a criminal attorney about pursuing theft charges and represented that the distributed amounts had not been used for another purpose. The IRS found the submitted information consistent with her account and waived the 60-day rollover deadline under section 408(d)(3)(I). She received 60 days from the ruling's issuance to roll over no more than the combined amount, provided all other rollover requirements were met. The waiver did not authorize rollover of any amount required to be distributed under section 408(a)(6).

Ruling snapshot

• Question: May the taxpayer receive a waiver of the 60-day IRA rollover deadline for withdrawals made by her spouse without her knowledge or consent?
• Outcome: approved
• Key authorities: IRC §§ 408(a)(6), 408(d)(3)(A), 408(d)(3)(D), 408(d)(3)(I); Rev. Proc. 2003-16

Full text (IRS public release)

DEPARTMENT OF THE TREASURY 201739017
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

JUL 03 2017

Uniform Issue List: 408.03-00

SE:T:EP:RA:T1

Taxpayer A =
IRA B =

Company C =
Amount 1 =
Amount 2 =
Amount 3 =

Amount 4 =

Dear :

This is in response to your request dated August 31, 2016, as supplemented by
correspondence dated June 23, 2017, in which you request, through your
authorized representative, 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 distributions equal to Amount 2, Amount
3, and Amount 4 from IRA B, which was maintained by Company C. Taxpayer A
asserts that her failure to accomplish a rollover within the 60-day period prescribed
by 408(d)(3)(A) of the Code was because her spouse had withdrawn Amounts 2,
3, and 4 from IRA B without her knowledge or consent.


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Taxpayer A owned IRA B. Taxpayer A represents that her husband repeatedly
withdrew amounts from IRA B without Taxpayer’s A knowledge or consent.
Amounts 2, 3, and 4 were distributions made from IRA B on January 29, ,
January 29, , and January 30, , respectively. Amount 2, Amount 3, and
Amount 4 total Amount 1.

When Taxpayer A discovered the unauthorized withdrawals from IRA B, she
contacted a criminal attorney regarding pursuing charges of theft. Taxpayer A
also submitted a request to the Service asking that it waive the 60-day rollover
requirement under section 408(d)(3) of the Code as to the distributions of Amounts
2, 3, and 4 from IRA B.

Taxpayer A represents that Amounts 2, 3, and 4 have 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 distributions of Amounts 2, 3, and 4 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


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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 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 because her spouse had withdrawn
Amounts 2, 3, and 4 from IRA B without her knowledge or consent.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service waives the 60-
day rollover requirement with respect to the distributions equal to Amounts 2, 3,
and 4. Provided all other requirements of section 408(d)(3), except the 60-day
requirement, will be met with respect to the contribution of an amount not in
excess of Amount 1, 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 a 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.


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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.

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

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

Cc: