Employee Benefits-IRS Waives 60-Day Deadline For IRA Rollover

In a private letter ruling (an “LTR”), the Internal Revenue Service (the “IRS”) waived the 60- day deadline for rolling over amounts into an individual retirement account (an “IRA”).

In LTR 201319034, the taxpayer initiated a transfer of Amount 1 from IRA A, maintained at Bank X, to Bank Y. However, even though the taxpayer intended to transfer Amount 1 to an IRA, Bank Y mistakenly deposited Amount 1 into a non-IRA account. The mistake was not discovered until more than 60 days after the transfer to Bank Y was initiated. Amount 1 was subsequently deposited into an IRA at Bank Y. The taxpayer then requested that the IRS waive the 60-day IRA rollover deadline.

If an amount is distributed from an IRA, including a transfer initiated by the IRA owner, the amount is generally taxable, unless the amount is rolled over into an IRA within 60 days of the distribution. IRC section 408(d)(1) and (3). Under section 408(d)(3)(L), the IRS may waive the 60-day deadline, when the failure to waive would be against equity or good conscience, including the happening of a casualty, disaster, or other event beyond the reasonable control of the distribution recipient. Rev. Proc. 2003-16 discusses how the IRS will handle a waiver request. In this case, the IRS concluded that the failure to meet the 60-day deadline was due to a mistake by Bank Y. Therefore, the IRS granted the waiver of the 60-day deadline for the distribution (i.e., transfer) of Amount 1.