Contribution to an IRA After Death

[Guest richardl]

A husband dies in January 2004. Can the wife make an IRA contribution on his behalf for the 2003 tax year and claim the deduction on their joint Form 1040. The husband qualified for the IRA contribution, no other retirement plans etc.

[mbozek]

Dont see how it is possible since a power of attorney from H to W is revoked at H's death.

[Appleby]

My initial reaction was to say yes, because the only two references (PLRs) I could find on the topic disallowed the contribution for the year of death- not for the prior year. However, language in at least one PLR states that since the contribution is for retirement, the contribution is not allowed for the deceased. This led me to conclude that whether the contribution applies to the current or previous year, it is not allowed for a deceased...

In PLR 8439066, the IRS ruled that the estate could not contribute to the IRA of the deceased for the year of death, if the contribution is being made after the individual died. Had the amount be contributed before death, it would have been OK.

The question then becomes, would the contribution be allowed for the previous tax-year if the individual died after the end of the year? It appears not. In the same PLR, the IRS stated that “Since the taxpayer is deceased, the contribution made by the deceased’s Estate would not be a contribution for retirement purposes”, which would suggest that any contribution after death is not allowed.

Another quote from the PLR is “Section 1.408-2(a) of the Income Tax Regulations specifies the person who may establish and maintain an IRA to include an individual, an employer, or an employee association. The regulations do not provide that the decedent’s personal representatives, the decedent’s estate, or beneficiaries of the decedent’s estate can establish or maintain and IRA on behalf of an individual. This is because the primary purpose of the IRA is for retirement.”

If the wife wanted to make a spousal IRA contribution on her behalf, based on her deceased’s husband income, then that would be allowed. PLR 8527083.

I am out of the office today. Tomorrow I will attach the PLRs so you can review them and make your own interpretation

[Belgarath]

I agree with Appleby - I do not believe that a contribution can be made to the IRA of the deceased by the surviving spouse. Following is an excerpt from the PLR 8527083 that he references:

Letter Ruling 8527083, April 12, 1985.., Retirement savings: Contribution to IRA in year earner spouse died: , (Apr. 12, 1985)

This ruling is based upon your representation that no contribution has been made for 1984 on behalf of your husband to his IRA. This ruling does not permit a contribution to your

husband's IRA for 1984. Any such contribution made to your husband's IRA for taxable year 1984 would be considered an excess contribution and subject to the 6 percent excise tax for

the year the contribution is made and each year it remains in your husband's IRA.

[Guest richardl]

Thanks for all your input.

[Appleby]

That reminds me: the PLRs attached

Private_Letter_Ruling_8527083.pdf

[Appleby]

Can attach only one file per post

Private_Letter_Ruling_8439066.pdf