Rollover Contributions

Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 201923002
Release Date: 6/7/2019
Index Number: 408.03-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:EEE:EB:QP2
PLR-129433-18
Date:
March 04, 2019
Decedent = ---
Decedent’s IRA = ---
Taxpayer = ---
Taxpayer’s Trust = ---
Dear ---:
This letter responds to your request dated October 2, 2018, in which you, through your authorized representative, requested rulings under section 408 of the Internal Revenue Code.
The following facts and representations have been submitted under penalties of perjury in support of the rulings requested.
Decedent was married to Taxpayer until his death, at which time both Decedent and
Taxpayer were over 70 ½ years old.
At the time of his death, Decedent owned an individual retirement account, Decedent’s
IRA. The beneficiary of Decedent’s IRA was Taxpayer’s Trust. Taxpayer is the sole trustee and beneficiary of Taxpayer’s Trust which provides that Taxpayer has the right to withdraw its net income and/or its principal. Taxpayer has the right to modify, amend, or revoke Taxpayer’s Trust at any time and has the sole authority and discretion to distribute the Decedent’s IRA proceeds to herself at any time. Taxpayer intends to roll the amounts paid to her from Decedent’s IRA to an IRA in her own name.
You have requested the following rulings:
1. Decedent’s IRA will not be treated as an inherited IRA within the meaning of section 408(d) with respect to Taxpayer;
PLR-129433-18 2
2. Taxpayer is eligible to roll over distributions from Decedent’s IRA to one or more
IRAs established and maintained in her own name pursuant to section
408(d)(3)(A)(i), provided that the rollovers occur no later than the sixtieth day following the day the proceeds are received; and
3. Subject to the limitation in section 408(d)(3)(B), Taxpayer will not be required to include in gross income for federal tax purposes, for the year in which a distribution from Decedent’s IRA is made, any portion of the proceeds distributed from Decedent’s IRA which are timely rolled over to one or more IRAs set up and maintained in Taxpayer’s name.
With respect to your ruling requests, section 408(d)(1) provides that, except as otherwise provided in section 408(d), any amount paid or distributed out of an IRA shall be included in gross income by the payee or distributee, as the case may be, in the manner provided under section 72.
Section 408(d)(3) provides that section 408(d)(1) does not apply to a rollover contribution if such contribution satisfies the requirements of section 408(d)(3)(A) and (B).
Section 408(d)(3)(A) provides that section 408(d)(1) does not apply to any amount paid or distributed out of an IRA to the individual for whose benefit the account is maintained if: (i) the entire amount received (including money and any other property) is paid into an IRA for the benefit of such individual not later than the 60th day after the day on which he receives the payment or distribution; or (ii) the entire amount received (including money and any other property) is paid into an eligible retirement plan for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received, except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross income (determined without regard to section 408(d)(3)).
Section 408(d)(3)(B) provides that section 408(d)(3) does not apply to any amount described in section 408(d)(3)(A)(i) received by an individual from an IRA if at any time during the one-year period ending on the day of such receipt such individual received any other amount described in section 408(d)(3)(A)(i) from an IRA which was not includible in his gross income because of the application of section 408(d)(3).
Section 408(d)(3)(C)(i) provides, in pertinent part, that, in the case of an inherited IRA, section 408(d)(3) shall not apply to any amount received by an individual from such account (and no amount transferred from such account to another IRA shall be excluded from gross income by reason of such transfer), and such inherited account shall not be treated as an IRA for purposes of determining whether any other amount is a rollover contribution.
Section 408(d)(3)(C)(ii) provides that an IRA will be treated as inherited if the individual for whose benefit the account is maintained acquired such account by reason of the PLR-129433-18 3 death of another individual, and such individual was not the surviving spouse of such other individual.
Section 1.408-8, Q&A-5, provides that a surviving spouse of an individual may elect to treat the spouse’s entire interest as a beneficiary in the individual’s IRA as the spouse’s own IRA. In order to make this election, the spouse must be the sole beneficiary of the IRA and have an unlimited right to withdraw amounts from the IRA. If a trust is named the beneficiary of the IRA, this requirement is not satisfied even if the spouse is the sole beneficiary of the trust.
Section 408(d)(3)(E) provides that section 408(d)(3) does not apply any amount to the extent that such amount is a required minimum distribution described in section 408(a)(6).
Because Taxpayer is entitled to the proceeds of Decedent’s IRA as the sole beneficiary of Taxpayer’s Trust during Taxpayer’s life, for purposes of applying section 408(d)(3)(A) to Decedent’s IRA, Taxpayer is effectively the individual for whose benefit the account is maintained. Accordingly, if Taxpayer receives a distribution of the proceeds of Decedent’s IRA, subject to the limitation of section 408(d)(3)(B), she may roll over the distribution (other than amounts required to have been distributed or to be distributed in accordance with section 401(a)(9)) into one or more IRAs established and maintained in her name.
Therefore, with respect to your ruling requests, we conclude that:
1. Decedent’s IRA will not be treated as an inherited IRA within the meaning of section 408(d) with respect to Taxpayer;
2. Taxpayer is eligible to roll over distributions from Decedent’s IRA to one or more
IRAs established and maintained in her own name pursuant to section
408(d)(3)(A)(i), provided that the rollovers occur no later than the sixtieth day following the day the proceeds are received; and
3. Subject to the limitation in section 408(d)(3)(B), Taxpayer will not be required to include in gross income for federal tax purposes, for the year in which a distribution from Decedent’s IRA is made, any portion of the proceeds distributed from Decedent’s IRA which are timely rolled over to one or more IRAs set up and maintained in Taxpayer’s name.
Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides
PLR-129433-18 4 that it may not be used or cited as precedent.
The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party, as specified in Rev. Proc. 2019-1, 2018-1 I.R.B. 1, § 7.01(16)(b). This office has not verified any of the material submitted in support of the request for ruling, and such material is subject to verification on examination. The Associate office will revoke or modify a letter ruling and apply the revocation retroactively if there has been a misstatement or omission of controlling facts; the facts at the time of the transaction are materially different from the controlling facts on which the ruling was based; or, in the case of a transaction involving a continuing action or series of actions, the controlling facts change during the course of the transaction. See
Rev. Proc. 2019-1, § 11.05.
In accordance with the power of attorney on file with this office, a copy of this letter is being sent to your authorized representatives.
Sincerely,
Keith R. Kost
Senior Technician Reviewer
Qualified Plans Branch 2
Office of Associate Chief Counsel
(Employee Benefits, Exempt Organizations, and
Employment Taxes) cc: