Can the POA convert an IRA to a Roth after death of owner?
Mother owns a traditional IRA and passes away. Daughter is POA and one of (2) beneficiaries, but is the majority benficiary. After death of mother, Daughter (POA) discovers the tax benefit if the mother had converted her traditional IRA to a Roth while alive because mother was in a very low tax bracket. Is it too late then to do this after death of her mother with tax liability flowing to her Mother’s tax return as if the mother had done it while she (the mother) was alive? Or is the only option for the (2) beneficiaries to convert on their own tax return and tax brackets? Would it make a difference if the daughter were the only beneficiary?
Permalink Submitted by Alan Spross on Thu, 2010-03-18 00:59
Since a POA automatically expires at the death of the grantor, that option is not applicable.
However, your next question would be whether the executor could convert. I know of no ruling that allows this action even though there has been a ruling that allows an executor to recharacterize a conversion done by the owner up to the extended due date for the year of the owner’s conversion. Of course, a spousal beneficiary can convert to a Roth IRA because they can assume ownership. But a non spouse beneficiary who cannot convert an inherited IRA is not allowed to produce a conversion through action by the executor.