Waiver of 60-Day Rollover Requirement

SECTION 4. EFFECT ON OTHER
DOCUMENTS

26 CFR 601.201: Rulings and determination letters.

Rev. Proc. 93–38 is obsolete except as
provided in section 5 of this revenue procedure.

Rev. Proc. 2003–16

(Also, Part I, §§ 402 and 408.)

SECTION 1. PURPOSE

SECTION 5. EFFECTIVE DATE
.01 An issuer may rely on the list of
qualified census tracts contained in this revenue procedure with respect to a commitment to provide financing if, in the case of
a commitment made on or before the date
of purchase of the residence, the commitment is made during the period specified
in this section 5.01 or, in the case of a commitment made after the purchase date, the
residence was purchased during the period specified in this section 5.01. The period begins January, 27, 2003, the date of
publication of this revenue procedure in the
Internal Revenue Bulletin, and ends on the
date as of which the list of qualified census tracts is rendered obsolete by a new revenue procedure.
.02 Notwithstanding section 5.01 of this
revenue procedure, issuers may continue to
rely on the list of qualified census tracts
contained in Rev. Proc. 93–38 for mortgages financed with proceeds of bonds that
were sold or for certificates that were issued with respect to bond authority that was
exchanged, on or before April 27, 2003, the
date that is 3 months after publication of
this revenue procedure in the Internal Revenue Bulletin, if the commitments to provide financing for the mortgages or to issue
certificates are made on or before June 27,
2003, the date that is 5 months after publication of this revenue procedure in the Internal Revenue Bulletin.
SECTION 6. DRAFTING INFORMATION
The principal authors of this revenue
procedure are Laura Waugh and Timothy
Jones of the Office of Chief Counsel. For
further information regarding this revenue
procedure, contact Laura Waugh at (202)
622–3890 (not a toll-free call).

January 27, 2003

This revenue procedure provides guidance on applying to the Internal Revenue
Service for a waiver of the 60-day rollover requirement contained in §§ 402(c)(3)
and 408(d)(3) of the Internal Revenue Code.
It also provides for an automatic waiver under certain circumstances.
SECTION 2. BACKGROUND AND
GENERAL INFORMATION
.01 Section 401(a)(31) of the Code requires that a qualified trust provide for the
direct transfer of eligible rollover distributions. A similar rule applies to § 403(a) annuity plans, § 403(b) tax-sheltered annuities
and § 457 eligible governmental plans. (See
§§ 403(a)(1), 403(b)(10) and 457(d)(1)(C).)
If a distributee fails to elect to have an eligible rollover distribution paid directly to
an eligible retirement plan, section 3405(c)
provides that the payor of a designated distribution that is an eligible rollover distribution must withhold from such distribution
an amount equal to 20 percent of such distribution.
.02 Sections 402(c)(3) and 408(d)(3) of
the Code require generally that any amount
distributed from a qualified trust or individual retirement plan must be transferred
to an eligible retirement plan no later than
the 60th day following the day of receipt
in order to avoid inclusion in the distributee’s gross income. A similar rule applies
to § 403(a) annuity plans, § 403(b) taxsheltered annuities and § 457 eligible governmental plans. (See §§ 403(a)(4)(B),
403(b)(8)(B) and 457(e)(16)(B).)
.03 Section 72(t) of the Code imposes
an additional tax on a distribution from a
qualified retirement plan equal to 10-percent
of the amount of the distribution included
in the distributee’s gross income, subject to
certain exceptions.
.04 Section 644 of the Economic Growth
and Tax Relief Reconciliation Act of 2001
(“EGTRRA”), Pub. L. 107–16, amended
§ 402(c)(3) of the Code and added new
§ 408(d)(3)(I) to permit the Secretary to
waive the 60-day rollover requirement
“where the failure to waive such requirement would be against equity or good con-

359

science, including casualty, disaster, or other
events beyond the reasonable control of the
individual subject to such requirement.” The
Conference Report to EGTRRA provides
examples of situations that may justify
waiver of the 60-day rollover requirement,
such as during a period in which a distribution in the form of a check was not
cashed, or for errors committed by a financial institution, or in cases of inability
to complete a rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country or
postal error. (H.R. Rep. No. 84, 107th
Cong., 1st Sess. 252 (2001).) The amendments made by § 644 of EGTRRA apply
to distributions after December 31, 2001.
.05 Under §§ 7508 and 7508A of the
Code, the time for making a rollover may
be postponed in the event of service in a
combat zone or in the case of a Presidentially declared disaster or a terroristic or
military action. See Regulations
§ 301.7508–1 and Rev. Proc. 2002–71,
2002–46 I.R.B. 850.
.06 Rev. Proc. 2003–4, 2003–1 I.R.B.
123 (January 6, 2003), provides the procedures for issuing letter rulings, information letters, etc., on matters under the
jurisdiction of the Commissioner, Tax Exempt and Government Entities Division.
.07 Rev. Proc. 2003–8, 2003–1 I.R.B.
236 (January 6, 2003), provides guidance
for complying with the user-fee program as
it pertains to requests for letter rulings, information letters, etc., on matters under the
jurisdiction of the Commissioner, Tax Exempt and Government Entities Division.
SECTION 3. REQUIREMENTS FOR
HARDSHIP EXCEPTION TO
60-DAY RULE
.01 Application to the Service. Except as
provided in Section 3.03 below, a taxpayer
must apply for a hardship exception to the
60-day rollover requirement using the same
procedure as that outlined in Rev. Proc.
2003–4 for letter rulings, accompanied by
the user fee set forth in Rev. Proc. 2003–8.
.02 Requirements for favorable ruling.
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,
the Service will consider all relevant facts

2003–4 I.R.B.

and circumstances, including: (1) errors
committed by a financial institution, other
than as described in Section 3.03 below; (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.
.03 Automatic approval. No application to the Service is required if a financial institution receives funds on behalf of
a taxpayer prior to the expiration of the 60day rollover period, the taxpayer follows all
procedures required by the financial institution for depositing the funds into an eligible retirement plan within the 60-day
period (including giving instructions to deposit the funds into an eligible retirement
plan) and, solely due to an error on the part
of the financial institution, the funds are not
deposited into an eligible retirement plan
within the 60-day rollover period. Auto-

2003–4 I.R.B.

matic approval is granted only: (1) if the
funds are deposited into an eligible retirement plan within 1 year from the beginning of the 60-day rollover period; and (2)
if the financial institution had deposited the
funds as instructed, it would have been a
valid rollover.
.04 General rules. To be eligible for a
waiver of the 60-day rollover period, either automatic or through application to the
Service, the distribution must have occurred after December 31, 2001, and the
rules regarding the amount of money or
other property that can be rolled over into
an eligible retirement plan within the 60day rollover period (including § 402(c)(6)
relating to sales of distributed property) apply to deposits made pursuant to a waiver
of the 60-day rollover period (thus, if a taxpayer received $6,000 in cash from the taxpayer’s IRA, the most that could be
deposited into an eligible retirement plan
pursuant to a waiver of the 60-day rollover period is $6,000). Also, the rules for
waiver of the 60-day rollover period in this

360

revenue procedure apply to distributions
from an individual retirement plan described
in § 408(a) or (b), a plan qualified under
§ 401(a), a § 403(a) annuity plan, a § 403(b)
tax-sheltered annuity and a § 457 eligible
governmental plan.
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective on
January 27, 2003.
DRAFTING INFORMATION
The principal author of this revenue procedure is Roger Kuehnle of the Employee
Plans, Tax Exempt and Government Entities Division. For further information regarding this revenue procedure, please
contact Employee Plans’ taxpayer assistance telephone service at 1–877–829–
5500 (a toll-free number), between the hours
of 8:00 a.m. and 6:30 p.m. Eastern Time,
Monday through Friday.

January 27, 2003