Heart Act to Roth IRA

Submitted by Mhotchkiss on Tue, 2016-05-31 18:42

Alan, are you the same Alan that answered this question (17806) and the one here – https://irahelp.com/forum-post/14026-military-heart-act-family-sglie-and-roth-ira ?

The answers appear to be different. It would be very helpful to know if a military member would be eligible to rollover to Roth IRA the death benefit proceeds from SGLI spousal coverage. I can not find any official code/law that uses the term FSGLI or SGLIF. The only thing I see is in “38 U.S. Code § 1967 – Persons insured; amount” which specifies a covered person includes “(ii)each insurable dependent of the member (other than a dependent who is also a member of a uniformed service and, because of such membership, is automatically insured under this paragraph).”

Since this is an SGLI covered person, would the proceeds from SGLI upon their death not be eligible under Heart ACT to roll into a Roth IRA?

-m



Submitted by Alan - IRA critic on Wed, 2016-06-01 01:54

m- Search turned up a reply from me in 2009 indicating that a FSGLI payment was eligible for rollover to the Roth IRA. Sec 1967 includes a dependent’s death (the family portion). Also, Sec 408(e) reads as follows:

A) In generalThe term “qualified rollover contribution” includes a contribution to a Roth IRA maintained for the benefit of an individual made before the end of the 1-year period beginning on the date on which such individual receives an amount under section 1477 of title 10, United States Code, or section 1967 of title 38 of such Code, with respect to a person, to the extent that such contribution does not exceed—(i) . the sum of the amounts received during such period by such individual under such sections with respect to such person, reduced by(ii)the amounts so received which were contributed to a Coverdell education savings account under section 530(d)(9). 

Therefore, my thinking remains the same regarding a Roth rollover of such a payment for the death of a dependent not in the military.

 

Submitted by [email protected] on Wed, 2016-06-01 12:48

I agree with your conclusion, but am troubled by the thinking that the Heart Act was “intended” to provide for the familie’s of fallen service members, not for the service member’s loss of a family member.  So, is there a way to get any type of clarification from IRS or Treasury as to whether this would apply as we think it should according to the wording of the law?  I suppose one could apply for a PLR, but that does not provide a blanket answer. -m

Add new comment

Log in or register to post comments