early death
I have a client who died this weekend age 49. He left a sizable IRA with his estate as beneficiary. He had just gotten married and never got around to changing beneficiary to his new wife.
I realized that the IRS rule is that an estate , as Ed would say, does not have a pulse and a heartbeat and therefore cannot be a designated beneficiary. As such the 5 yr rule comes into play meaning the estate has to take distribution by the end of the 5th yr following year of death or 12/31/2013. The stretch is as dead as the client.
Can anyone suggest a way where the ira can be rolled to the wife, OTHER THAN A PLR?
Since the marriage is so recent he may not even have a will.
I am wonder how to get the spousal rollover a) if there is no will
b) yes he did make a will with wife to inherit his assets
Thank You
Permalink Submitted by Bruce Steiner on Wed, 2008-12-10 19:49
If it’s a sizable IRA, it may be worth the cost ($9,000 IRS user fee plus a few thousand dollars in legal fees) for a private letter ruling.
You can do it without a private letter ruling. You just don’t have any assurance as to the tax consequences. And the reporting won’t match — there will be a Form 1099 from the IRA to the estate, and then a Schedule K-1 to the spouse.
Permalink Submitted by charles lore on Fri, 2008-12-12 01:26
Thank you for the reply. Actually the custodian has confirmed with me that if the spouse is sole executor of the estate and ALSO sloe beneficiary of estate then they will allow , with a letter from estate attorney blessing it, a Spousal Roll over. If this is done the custodian said there wil be no reporting to IRS other than what is normally done in a spousal rollover.
So in other words if the conditions are met a rollover can proceeed as if the spouse was all along the DB and the IRS will never know any better.
To me , a novice this seems quite generous. Does this seem a normal workout to you Mr Steiner?