IRS Waived 60-Day Rollover Requirement Due to Acute Medical Condition

In PLR 201849018, the Decedent received a cash distribution from his IRA.  The Decedent failed to accomplish a rollover within the 60-day period prescribed by Internal Revenue Code § 408(d)(3)(A) because of an acute medical condition that caused severe cognitive impairment.

Prior to the Decedent’s death, the Decedent’s son, now the Executor of the Decedent’s estate, was appointed as the Decedent’s guardian.  As the Decedent’s guardian, the Decedent’s son noticed that the Decedent failed to file an income tax return during the year in which he withdrew the money from the IRA.  The Decedent’s son promptly filed a federal income tax return reporting the distribution.  This distribution was used for no other purpose.

As Executor of the Decedent’s estate, the Decedent’s son requested a ruling that the IRS waive the 60-day rollover requirement as to the Decedent’s withdrawal from the Decedent’s IRA.

Rev Proc 2003-16 provides that the IRS 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.”  Further, the IRS will consider the following facts: (1) errors committed by a financial institution; (2) inability to complete a rollover due to death, disability, or incarceration, (3) use of the amount distributed, and (3) the time elapsed since the distribution occurred.

Because the failure to make the rollover within the requisite time period was caused by the Decedent’s “acute medical condition that caused severe cognitive impairment, “ the IRS waived the 60-day rollover requirement.

The IRS did note, however, that the scope of the Executor’s authority is a matter of state law, and that this ruling assumes that the Executor’s actions to complete the rollover on the Decedent’s behalf are in accordance with the laws of the state in which the probate is being administered and are taken pursuant to the Executor’s authority.

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