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IRA Distribution Rollover Requirement Waived

FEB. 10, 2015

LTR 201519040

DATED FEB. 10, 2015
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2015-11200
  • Tax Analysts Electronic Citation
    2015 TNT 91-23
Citations: LTR 201519040

Uniform Issue List: 408.03-00

 

Date: February 10, 2015

 

 

Refer Reply To: T:EP:RA:T1

 

 

LEGEND:

 

 

Taxpayer A = * * *

 

IRA B = * * *

 

Financial Institution C = * * *

 

Account D = * * *

 

Financial Institution E = * * *

 

City X = * * *

 

City Y = * * *

 

Amount 1 = * * *

 

 

Dear * * *:

This is in response to your request dated September 8, 2014, as supplemented by correspondence dated January 8, 2015, 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 a distribution equal to Amount 1 from IRA B, which was maintained by Financial Institution C. Taxpayer A asserts that her failure to accomplish a rollover within the 60-day period prescribed by section 408(d)(3)(A) of the Code was due to her failure to receive notification that Financial Institution C would no longer serve as the custodian for IRA B.

Taxpayer A maintained IRA B with Financial Institution C. In late 2013, Financial Institution C attempted to contact Taxpayer A to inform her of their resignation as custodian of IRA B effective December 31, 2013. This notice was sent to Taxpayer A's last known address in City X. Taxpayer A never received the notice from Financial Institution C because she had moved to another address in City Y. When Taxpayer A did not respond to the notice, Financial Institution C transferred IRA B to Financial Institution E which placed Amount 1 in Account D, a non-IRA account.

In August 2014, Taxpayer A received the 2013 notice from Financial Institution C at her new address in City Y. Taxpayer A represents that she does not know why Financial Institution C did not have her correct address in 2013 nor how they finally were able to send her the 2013 notice in August, 2014. When Taxpayer A received the notice she contacted Financial Institution C who informed her that IRA B had been transferred to Financial Institution E and placed in a non-IRA account.

Taxpayer A represents that the assets in IRA B have not been used for any other purpose. Taxpayer A also represents that Financial Institution E has agreed to serve as an IRA custodian if Taxpayer A receives a waiver from the Service.

Based on the above facts and representations, Taxpayer A requests a waiver of the 60-day requirement contained in section 408(d)(3) of the Code with respect to the distribution of Amount 1 from IRA B.

Section 408(a) of the Code defines an IRA 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 defines and 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).

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 presented and documentation submitted by Taxpayer A are consistent with her assertion that the failure to complete a rollover of the distribution of Amount 1 from IRA B was due to a failed notification of the distribution because of a postal delivery error.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service waives the 60-day rollover period with respect 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, Amount 1 will be considered a rollover contribution with 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.

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 * * * (I.D. # * * *) 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:

 

* * *
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2015-11200
  • Tax Analysts Electronic Citation
    2015 TNT 91-23
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