PRIVATE LETTER RULING 201005057:
A taxpayer we will call Sam Smith was employed at Warehouse A and participated in their company plan. She eventually moved on to another warehouse plant but maintained her retirement savings in Warehouse A. Sam talked to representatives from her new employer and decided to roll the funds directly from her current retirement plan to her new company plan.
In order to accomplish this, Sam received a check payable to her new company, FBO Sam.
Representatives of her new company plan would accept the check as drawn provided it was endorsed as 'for deposit only' by a principal of her new company. Sam held onto the check until a time past 60 days after she made the initial withdrawal from her former company plan at which time it was deposited into the new company plan. Up to that point, Sam stated that the withdrawal amount had not been used for any other purpose.
For the calendar year of the withdrawal from the Warehouse A plan, Sam received a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit- Sharing Plans, IRAs, Insurance Contracts, showing the distribution from the former company plan. Box 7 (Distribution Code(s)) of Form 1099-R was coded 'G' to indicate a direct rollover to a qualified plan.
Sam asked IRS to waive the 60-day requirement with regards to the distribution from her former company plan.
IRS responded that the 60-day rule was NOT an issue. IRS noted that Sam never received a distribution subject to the 60-day rollover requirement. She took a company plan distribution in the form of a 'direct rollover,' of amounts due to her from contributions and earnings from her former company plan. The distribution check was given to Sam, BUT made out to her new company, FBO Sam Smith. Therefore, the check was NOT payable to Sam. She lacked control over the check and could not have disposed of it. Form 1099-R supported this conclusion.
IRS ruled that Sam's receipt of the distribution was a direct rollover and was therefore not subject to the 60-day rollover requirement.