Advanced Underwriting Consultants

Question of the Day – September 23

Ask the Experts!

Here’s the question of the day.

Question: My client died naming his estate the beneficiary of his IRA.  The surviving spouse is the only beneficiary of the estate.  Can the IRA qualify for spousal rollover?

Answer: Maybe, although it may require seeking a private letter ruling to achieve tax certainty.

Most people assume that if a trust or the estate is the beneficiary and a surviving spouse is the trustee or executor of the estate, the surviving spouse can just take a distribution and roll it into his/her IRA.

It is IRS policy to allow such a rollover provided

  • the surviving spouse is the only beneficiary of the trust or estate and
  • the surviving spouse has the right as trustee or executor to cause the IRA to be distributed to himself/herself without the consent of a third party.

Any other set of circumstances would defeat the ability of a surviving spouse to do a spousal rollover.

As if this were not bad enough, the above is merely an IRS policy spelled out in Private Letter Rulings.  The regulations or published IRS rulings do not give any citable authority for the position.  Numerous PLRs have allowed for the spousal rollover, but it was necessary for the surviving spouse to go to the time and expense to get a PLR.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.