IRS written determination 201430030

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
MAY 0 1 ?014
Uniform Issue List: 402.00-00
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Legend:
Taxpayer A
=
***
Company C
=
***
Trustee T
=
***
Amount A
=
***
Plan X
=
***
Dear·
281430030'
This is in response to your request dated February 24, 2014, in which you
requested a waiver
of the 60-day rollover requirement contained in section 402(c)(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 he received a distribution from Plan X totaling
Amount A. Taxpayer A asserts that his failure to accomplish a rollover within the 60-day
period prescribed by section 402(c)(3) was due to Taxpayer A's mental condition and
treatments
for such condition which impaired his ability to accomplish a timely rollover.
Taxpayer A further represents that Amount A has not been used for any other purpose.
Taxpayer A was diagnosed with Parkinson's disease
in 2009. As part of his
treatment, Taxpayer A was prescribed medications which cause confusion, memory
loss and cognitive impairment.
In January of 2011, Taxpayer A took a loan from Plan X.
Loan re-payments were withheld bi-weekly from his paycheck from January 2011 to
January
2013.

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201430030
Taxpayer A's illness and the side effects from his medications negatively impair
his cognitive function and memory and his
ability to manage the details
of day to day
life. These side effects led eventually to his disability leave from employment on
January 21, 2013.
In February
of 2013, Taxpayer A was correctly informed by Company C's human
resources department that he would have 12 months from the date that his disability
leave began to satisfy the balance
of the loan, plus an additional60 days to effect a
rollover. Taxpayer A maintains that the human resources representative told him "not to
worry" until the March 21, 2014 deadline.
In July 2013, Company C changed Taxpayer A's employment status from "active
(disabled)" to "terminated". This change triggered the 60-day cure period for the loan
Taxpayer A took under Plan
X. On September 27, 2013, the unpaid balance of the loan,
Amount
A, was classified as a distribution of a plan loan offset amount to Taxpayer A.
Taxpayer A represents that Company C did not inform him
of the change in
employment status except for an email sent to him in July 2013 informing him of the
status
of the loan and the impending distribution. However, due to his illness and the
influence
of medications that impaired his cognitive abilities, Taxpayer A did not see or
read the email at the time. Taxpayer A realized a taxable event had occurred when he
received Form
1099-R on January
31,2014 showing the distribution.
Taxpayer A has submitted medical documentation showing the nature
of his
mental impairment.
Based on the facts and representations, you request a ruling that the Internal
Revenue Service (the "Service") waive the 60 day rollover requirement in section
402(c)(3)
of the Code with respect to the distribution of Amount A.
Section 402(c) of the Code provides that if any portion of the balance to the credit
of an employee in a qualified trust is paid to the employee in an eligible rollover
distribution, and the distributee transfers any portion
of the property received in such
distribution to an eligible retirement plan, and in the case
of a distribution of property
other than money, the amount so transferred consists
of the property distributed, then
such distribution (to the extent transferred) shall not be includible in gross income for
the taxable year
in which paid. Section 402(c)(3)(A) states that such rollover must be
accomplished within 60 days following the day
on which the distributee received the
property. An individual retirement account (IRA) constitutes one form of eligible
retirement plan.
Section 402(c)(4)
of the Code provides that an eligible rollover distribution shall
not include any distribution to the extent such distribution is required under section
401 (a)(9).
Section 402(c)(3)(B)
of the Code provides, in relevant part, that the Secretary
may waive the 60-day requirement under sections 402(c) where the failure to waive
such requirement would be against equity or good conscience, including casualty,

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201430030
disaster, or other events beyond the reasonable control of the individual subject to such
requirement.
Only distributions that
occurred after December 31,
2001, are eligible for
the waiver under section 402(c)(3)(B)
of the Code.
Section 1.402(c}-2, Q&A-9(a),
of the Income Tax Regulations (the "Regulations")
provides, in pertinent part, that a distribution of a plan loan offset amount, as defined in
Q&A-9(b), is an eligible rollover distribution if it satisfies Q&A-3 of that section. In
general, Q&A-3 provides that unless specifically excluded, an eligible rollover
distribution means any distribution to an employee (or to a spousal distributee) from a
qualified plan. Thus, an amount equal to the plan loan offset amount can be rolled over
by the employee (or spousal distributee) to an eligible retirement plan within the 60-day
period under section 402(c)(3), unless the plan loan offset amount fails to be an eligible
rollover distribution for another reason.
Section 1.402(c)-2, Q&A-9(b),
of the Regulations provides that, for purposes of
section 402(c), a distribution of a plan loan offset amount is a distribution that occurs
when, under the plan terms governing a plan loan, the participant's accrued benefit is
reduced (offset) in order to repay the loan (including the enforcement
of the plan's
security interest in a participant's accrued benefit). A distribution
of a plan loan offset
amount can occur
in a variety of circumstances, e.g., where the terms governing a plan
loan require that, in the event
of the employee's termination of employment or request
for a distribution, the loan be repaid immediately or treated as in default. A distribution
of
a plan loan offset amount also occurs when, under the terms governing the plan loan,
the loan is cancelled, as in default upon an employee's termination
of employment or
within a specified period thereafter. A distribution
of a plan loan offset amount is an
actual distribution, not a deemed distribution under section 72(p)
of the Code.
Rev. Proc.
2003-16, 2003-4 I.R.B. 359, (January 27, 2003), provides that in
determining whether to grant a watver
of the 60-day rollover requirement pursuant to
section 402(c)(3)
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 is
consistent with his assertion that his failure to accomplish a timely rollover was due to
Taxpayer A's mental condition and treatments for such condition which impaired his
ability to accomplish a timely rollover.
Therefore, pursuant to section 402(c)(3)(B)
of the Code, the Service hereby
waives the 60-day rollover requirement with respect to the distribution of Amount A
from Plan
X. Taxpayer A is granted a period of 60 days from the issuance of this ruling
letter to contribute Amount A into a Rollover IRA or another qualified plan. Provided all
other requirements
of section 402(c)(3) of the Code, except the 60-day requirement, are
met with respect to such contribution, Amount A will be considered a rollover
contribution within the meaning
of section 402(c)(3) of the Code.

201430030
This ruling does not authorize the rollover of amounts that are required to be
distributed by section
401 (a)(9) 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 611 O(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*** (ID# ***)at(***)***-***.
Please address all correspondence to SE:T:EP:RA:T3.
Enclosures:
Deleted
copy
of ruling letter
Notice
of Intention to Disclose
Sincerely yours,
(~ ,.6 rv{2~~ Lcr--
Laura B. Warshawsky, Manager
Employee Plans Technical Group 3