On May 27, 2011, the IRS, in four separate private letter rulings, “blessed” four fact patterns where it elected to waive the 60 day rollover requirement. Keep in mind, private letter rulings are directed only to the taxpayer who requested the ruling, and may not be used or cited as precedent (although as a practical matter practitioners use private letter rulings regularly as important guidance).
Under IRC Section 408(d), an individual may rollover (and thereby avoid tax) a distribution from an IRA into an eligible retirement plan for the distributee’s benefit within 60 days after the distribution. The term “eligible retirement plan” includes qualified pension, profit-sharing, stock bonus, and annuity plans, tax-deferred annuities under IRC Section 403(b), and eligible deferred compensation plans maintained by state and local governments and their agencies and instrumentalities. IRC Section 408(d) further gives the IRS the right to waive the 60 day requirement where events occur which are “beyond the reasonable control of the individual”. In Revenue Procedure 2003-16, the IRS stated it will consider all relevant facts and circumstances in deciding when to waive the 60-day rollover requirement, 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.