A missed IRA rollover deadline is waived after a custodian mailed notice to an old address

Plain-English summary

An IRA custodian resigned and assigned real estate investment trust shares to the account owner, creating a distribution. The custodian mailed the resignation notice to the taxpayer's former address, so the taxpayer did not learn of the distribution until the IRS later sent a CP 2000 notice. After discovering the problem, the taxpayer transferred shares worth more than the original distribution into another IRA and represented that the distributed amount had not been used for another purpose. The IRS found the missed deadline resulted from the taxpayer's failure to receive the custodian's notice, an event outside the taxpayer's reasonable control. It waived the 60-day rollover deadline under section 408(d)(3)(I), subject to the other rollover requirements and limited to the amount originally distributed.

Ruling snapshot

• Question: May the taxpayer receive a waiver of the 60-day IRA rollover deadline after the former custodian sent the distribution notice to an old address?
• Outcome: approved (the 60-day deadline was waived for the original distribution amount)
• Key authorities: IRC §§ 408(d)(3), 401(a)(9); Rev. Proc. 2003-16

Full text (IRS public release)

Number: 202023007

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAR 11 2020

Uniform Issue List: 408.03-00

Legend
Taxpayer A =
IRA B =

IRA C =

Financial Institution D =

Financial Institution E =

Fund F =

State G =
State H =

Amount 1 =
Amount 2 =

Date 1 =
Date 2 =

Date 3 =

Date 4 =

Date 5 =

Dear             :

This is in response to your request dated November 6, 2019, as supplemented by
a letter dated January 24, 2020, 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”).

You submitted, under penalties of perjury, the following facts and representations
in support of your ruling request.

Taxpayer A represents that on Date 3, he received a distribution equal to Amount
1 from IRA B, which was maintained by Financial Institution D. Taxpayer A asserts
that he was unable to accomplish a rollover of Amount 1 within the 60-day period
prescribed by section 408(d)(3)(A) of the Code because he failed to receive
notification that Financial Institution D resigned as custodian of IRA B.

On Date 1, Taxpayer A invested the assets of IRA B in shares of Fund F, a real
estate investment trust. At the time of this investment, Financial Institution D was
the custodian of IRA B and Taxpayer A lived in State G. On Date 2, Taxpayer A
moved from State G to State H. On Date 3, Financial Institution D sent a letter to
Taxpayer A stating that it was resigning as custodian of IRA B. The resignation
letter also stated that Financial Institution D assigned the shares in Fund F to
Taxpayer A, effective as of Date 3, and that such assignment resulted in a
distribution of the assets in IRA B to Taxpayer A. Financial Institution D’s
resignation letter, however, was sent to Taxpayer A’s former address in State G
and was not forwarded to his new address in State H. Consequently, Taxpayer A
was unaware that Amount 1 was distributed from IRA B until after the expiration of
the 60-day period when he received a CP 2000 Notice dated Date 4 from the
Internal Revenue Service. On Date 5, after consulting with Fund F, Taxpayer A’s
accountant, and Financial Institution E, Taxpayer A contributed shares in Fund F
equal to Amount 2, an amount greater than Amount 1, to IRA C, which was
maintained by Financial Institution E. 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 the shares in Fund F equal to Amount 1 from IRA B.

Section 408(a) of the Code defines an individual retirement account to mean a
trust created or organized in the United States and requires that the trustee be a
bank or an approved non-bank trustee.

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 the rollover provisions of section
408(d)(3) do not apply to any amount 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 that
was not includible in gross income because of the application of the rollover
provisions in 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)(3) 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.

Section 3.02 of Revenue Procedure 2003-16, 2003-4 I.R.B. 359 (“Rev. Proc.
2003-16”), 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.

Section 3.04 of Rev. Proc. 2003-16 provides that the rules regarding the amount of
money or other property that can be rolled over into an eligible retirement plan
within the 60-day rollover period apply to deposits made pursuant to a waiver of
the 60-day rollover period (thus, if a taxpayer received $6,000 in cash from the
taxpayer's IRA, the most that could be deposited into an eligible retirement plan
pursuant to a waiver of the 60-day rollover period is $6,000).

The information and documentation submitted are consistent with Taxpayer A’s
assertion that he was unable to accomplish a rollover of Amount 1 within the 60-
day period prescribed by section 408(d)(3)(A) of the Code because he failed to
receive notification that Financial Institution D resigned as custodian of IRA B.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service waives the 60-
day rollover requirement with respect to the distribution of shares in Fund F equal
to Amount 1 from IRA B. Provided all other requirements of section 408(d)(3) of
the Code, except the 60-day requirement, were met with respect to the
contribution of Amount 1 to IRA C on Date 5, such contribution will be considered
a rollover contribution within the meaning of section 408(d)(3).

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 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 [redacted]. Please address all correspondence to
SE:T:EP:RA:T1.

Sincerely,
Adam P. Zaebst, Manager
Employee Plans Technical Group 1
Enclosures:

Notice of Intention to Disclose
Deleted copy of this letter

cc: