Spousal Roth IRA for year of death
My wife died in March of 2011. It turns out that we are eligible to make Roth IRA contributions for me directly and a spousal IRA for her for 2011. We will be filing a joint return for 2011 with me as qualiied widower. I am told by Charles Schwab that Publication 590 prohibits the spousal contribution after death. I could not find such a prohibition in the statute or in Publication 590 probably because it does not make any sense. Any one know this answer?
Permalink Submitted by Alan Spross on Mon, 2011-12-19 22:49
While this is NOT clearly addressed in Pub 590, Schwab and tomd37 are correct.
The IRS ruled in PLR 8439066 that a regular contribution cannot be made for a decedent because such contributions are for the IRA owner’s retirement and therefore are not applicable to a decedent. The rules are more flexible for dealing with funds already in retirement accounts, for example an executor can complete a rollover that the decedent did not complete, and also an executor can recharacterize a Roth conversion before the extended due date when the conversion was done by the decedent.
The IRS also ruled in PLR 8527083 that a decedent’s income can be used to fund a spousal IRA contribution for the surviving spouse if the surviving spouse had lower earnings in the year of death and was otherwise eligible to receive a spousal IRA contribution.
These rulings were made back in the early days for IRAs, and have not been challenged or addressed since. Seems logical that they would be included in Pub 590 or IRS Regs, but there is no clear reference made in those sources.