ira rollover for children
talk about bad timing.. i had a client whose wife passed away early this year. she left about 100k of ira money behind in two annuities. one of the companies would do a custodian to custodian transfer but the other one would not, so we decided to have both checks totaling approx 100k cut to the husband (client) and we were just going to do a 60 rollover into a new investment (an annuity). well the client received the checks and deposited them into his bank account. it happens to be a joint bank account with him and one of his daughters. he had an unexpected heart attack and died a couple of days after depositing the checks and now they are not held in an ira anymore and his daughters wanted to be able to strech the ira out so they wouldnt have to pay all the taxes up front! i know that children do not have the ability to do 60 rollovers with their parents iras so is there any other way around paying all the taxes up front?!
Permalink Submitted by Alan Spross on Mon, 2011-05-23 21:33
Possibly, but it may take a PLR because it will be very difficult to get an IRA custodian to accept a post mortem rollover from the executor.
With respect to the 60 day rollover time limit, the IRS can waive that per copy of Sec 408(d)(3)(I):
>>>>>>>>>>>>>>>>>>>>
(I) Waiver of 60-day requirement
The Secretary may waive the 60-day requirement under
subparagraphs (A) and (D) 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 individual subject to such
requirement.
>>>>>>>>>>>>>>>>>>>>>
Allowing the executor to complete the above has been approved in various PLRs – 2005-16021, 2005- 16022, and 2005-02050. However, all of those cases did involve an erroneous distribution so the conditions differ from this case.
There is also a third problem. Even when the IRS approved a post mortem rollover, they did not hold that the executor selected beneficiary was considered a designated beneficiary for RMD purposes, so the daughters might still be stuck with the life expectancy of the father rather than theirs for RMDs.
The only good news is that rollover related PLRs have much lower fees that other IRA related PLR requests.
Permalink Submitted by Richard Fritts on Tue, 2011-05-24 19:13
ok.. thank you very much for the help and timely response!