IRS waives the 60-day deadline for an IRA rollover after a divorce

Plain-English summary

A taxpayer had relied on her spouse to handle financial and tax matters throughout their 45-year marriage. After their divorce, she received an IRA distribution and deposited it within 60 days into a non-IRA account, without any indication from the distributing institution that the money came from an IRA. She discovered the problem after receiving Form 1099-R, and represented that the funds had not been used for any other purpose. The IRS found the documentation consistent with her account and waived the 60-day rollover deadline under section 408(d)(3). It gave her 60 days from the ruling to contribute no more than the distribution, less any required minimum distributions, to an IRA in her name.

Ruling snapshot

• Question: Could the taxpayer receive a waiver of the 60-day IRA rollover deadline after depositing an IRA distribution into a non-IRA account?
• Outcome: approved (the taxpayer received 60 days to contribute the permitted amount to an IRA)
• Key authorities: IRC §§ 72, 408(a)(6), 408(d)(1), 408(d)(3); Rev. Proc. 2003-16

Full text (IRS public release)

202029006

Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities

IRS Employee Plans

April 21, 2020

Uniform Issue List: 408.03-00

Legend

Taxpayer A =

IRA B =

Account C =

Financial Institution D =

Financial Institution E =
Amount 1 =
Date 1 =
Date 2 =
Date 3 =

Year 1 =

202029006

Dear

This is in response to your request dated February 26, 2020, as supplemented by
correspondence dated March 11, 2020, 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”).

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

Taxpayer A represents that she received a distribution of Amount 1 from IRA B,
which was maintained by Financial Institution D. Taxpayer A asserts that the
failure to accomplish a rollover of Amount 1 within the 60-day period prescribed by
section 408(d)(3)(A) of the Code was due to reliance on her spouse for all financial
and tax matters, her recent divorce from her spouse, and the failure of Financial
Institution D to notify her that the distribution of Amount 1 was from an IRA.

Taxpayer A relied on her spouse to handle all financial and tax matters throughout
their marriage of 45 years. On Date 1, Taxpayer A and her husband divorced. On
Date 2, Financial Institution D made a distribution equal to Amount 1 from IRA B to
Taxpayer A. On Date 3, a date within the 60-day rollover period, Taxpayer A
deposited Amount 1 into Account C, a non-IRA account maintained by Financial
Institution E. Taxpayer A represents that Amount 1 has not been used for any
other purpose.

At the time of the distribution of Amount 1, Taxpayer A did not receive any
indication from Financial Institution D that Amount 1 was an IRA distribution.
Taxpayer A first became aware that Amount 1 was distributed from IRA B in the
early part of Year 1 when she received the Form 1099-R from Financial Institution
D, which reflected the IRA account and total distribution amount. After consulting
with her accountant, Taxpayer A hired an attorney for advice. Taxpayer A’s
attorney submitted a waiver request on her behalf, however, the ruling request
was closed due to procedural deficiencies. Subsequently, on February 26, 2020,
Taxpayer A submitted this request for a waiver.

Based on the facts and representations submitted, Taxpayer A requests a ruling
that the Internal Revenue Service (Service) waive the 60-day rollover requirement
under section 408(d)(3) of the Code with respect to the distribution of Amount 1.

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.

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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)(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) the
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 she failed to accomplish a rollover within the 60-day period
prescribed by 408(d)(3)(A) of the Code due to reliance on her spouse for all
financial and tax matters, her recent divorce from her spouse, and the failure of
Financial Institution D to notify her that the distribution of Amount 1 was from an
IRA.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service waives the 60-
day rollover requirement with respect to the distribution from IRA B equal to

202029006

Amount 1. Taxpayer A has 60 days from the issuance of this letter ruling to
contribute an amount no greater than Amount 1, less any required minimum
distributions, to an IRA established in the name of Taxpayer A. 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, 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 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 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,

Adam P. Zaebst, Manager
Employee Plans Technical Group 1

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