Death before IRA rollover could be completed
55 year old taxpayer took a $30,000 IRA withdrawal on 12/20/2013. Before he had a chance to make a rollover during the 60-day limit period, he unexpectedly died on 2/5/2014. On 2/15/2014 (day 57 after initial withdrawal) his surviving spouse went to the original IRA holder and tried to roll over the IRA. She was told she couldn’t since the taxpayer had passed away. The surviving spouse would like to not only get a waiver of the penalty but also be able to rollover the $30K. Per the IRS instructions this does NOT qualify for an automatic waiver of the penalty. To get a waiver the IRS instructions say you can apply to the IRS for a waiver of the 60-day rollover requirement by submitting a request for a letter ruling. I am concerned even if we get a PLR approval the surviving spouse may have trouble getting the financial institution to treat it as a rollover. Can anyone give me advice on strategy for PLR request (I have never done one) and the potential for success with getting a favorable ruling as well as being able to roll over the funds?
Permalink Submitted by Alan - IRA critic on Fri, 2014-08-15 17:23
There is a pretty good chance of a successful PLR request here, but it should be done by a tax professional experienced in drafting PLRs. Here is an article that reviews recent PLR history regarding post death rollovers. http://www.lawrencemg.com/FPA/handouts/Natalie%20Choate%20-%20keynote%20-%20Death&Taxes/DeathAndTaxes073.pdf
Permalink Submitted by Bruce Steiner on Sun, 2014-08-17 15:29
Alan is correct. There is a good chance of getting a favorable ruling. I have a ruling request pending on this issue now. If you’ve never obtained a ruling, you can look at Revenue Procedure 2014-4, which sets forth the procedures for requesting a ruling, or you can bring in co-counsel. Of course, you’ll have to consider whether, given the amount involved, it’s worth the legal fees (and the $500 IRS user fee). Bruce Steiner, attorney, NYC, also admitted in NJ and FL