August 7, 1989
TO: PENSION MEMBERS NO. 37-89
RE: TAX COURT DECISION CONCERNING IRA ROLLOVER
__________________________________________________________
Attached is a copy of Wood v. Commissioner, a Tax Court
decision addressing the 60-day period within which IRA rollovers
must be accomplished.
The taxpayer in Wood received a lump-sum distribution from
his employer's plan upon retirement. Within 60 days of his
receipt of this distribution, he opened an IRA rollover account
with a brokerage company, delivered the distribution check and
stock certificates to the account executive, and instructed the
account executive to deposit the check and the certificates into
his IRA rollover account. These amounts were deposited into
another account maintained by the taxpayer at the brokerage
company. The cash portion of the distribution was transferred
into the IRA rollover account within the 60-day period, but the
stock was not recorded as transferred to the IRA rollover account
until several months after the period had expired.
The Tax Court found that the brokerage house's failure to
record the transfer of the taxpayer's stock was nothing more than
a bookkeeping error. The court held that the substance of the
transaction, rather than the bookkeeping, should control. Noting
that the taxpayer took reasonable steps establish an IRA rollover
account and transfer the lump-sum distribution to that account in
a timely manner, the court held that the rollover was timely.
We will keep you informed of further developments.
Kathy D. Ireland
Assistant General Counsel
Attachment