Permalink Submitted by Alan Spross on Mon, 2008-08-04 23:55
Bruce,
Copied from Ed’s newletter:
>>>>>>> >>>>>>>>>>
Post-Death Rollover Rulings
PLRs 200415011 and 200415012
At first glance, the 60-day rule on IRA withdrawals seems pretty straightforward. If you take a
withdrawal from an IRA, you may put the exact amount of funds withdrawn back into an IRA
within 60 days and not incur income tax or IRS penalties. Such a process is considered a
“rollover,” permitted once every 12 months.
Second glances may reveal some confusion, though. What if John Smith takes money from his
IRA, then dies? Can the money be returned to an IRA after his death to avoid paying income tax
and leave more funds in tax-deferred territory?
A couple of recent private letter rulings (PLRs) illustrate the IRS’s thinking on this issue. In
essence:
• A non-spouse beneficiary will have a difficult time executing a post-mortem rollover. (PLR
200415011, released by IRS on April 9, 2004)
• A surviving spouse may have a great deal of leeway in restoring IRA distributions. (PLR
200415012, released by IRS on April 9, 2004)
>>>>>>> >>>>>>>>>>
Alternatively, it would be simpler if the executor placed the funds in the estate, if the advantages of pursuing a rollover are not compelling.
I recognize this could become a problem if the IRA beneficiaries differ from the estate beneficiaries. Another issue would be aborting the check order if the check were not issued. Who would have the authority to make that request?
Permalink Submitted by Alan Spross on Mon, 2008-08-04 23:55
Bruce,
Copied from Ed’s newletter:
>>>>>>> >>>>>>>>>>
Post-Death Rollover Rulings
PLRs 200415011 and 200415012
At first glance, the 60-day rule on IRA withdrawals seems pretty straightforward. If you take a
withdrawal from an IRA, you may put the exact amount of funds withdrawn back into an IRA
within 60 days and not incur income tax or IRS penalties. Such a process is considered a
“rollover,” permitted once every 12 months.
Second glances may reveal some confusion, though. What if John Smith takes money from his
IRA, then dies? Can the money be returned to an IRA after his death to avoid paying income tax
and leave more funds in tax-deferred territory?
A couple of recent private letter rulings (PLRs) illustrate the IRS’s thinking on this issue. In
essence:
• A non-spouse beneficiary will have a difficult time executing a post-mortem rollover. (PLR
200415011, released by IRS on April 9, 2004)
• A surviving spouse may have a great deal of leeway in restoring IRA distributions. (PLR
200415012, released by IRS on April 9, 2004)
>>>>>>> >>>>>>>>>>
Alternatively, it would be simpler if the executor placed the funds in the estate, if the advantages of pursuing a rollover are not compelling.
I recognize this could become a problem if the IRA beneficiaries differ from the estate beneficiaries. Another issue would be aborting the check order if the check were not issued. Who would have the authority to make that request?