PLR 9437042- Need a Copy

[Appleby]

I am hoping that someone has a copy of PLR 9437042...and would be kind enough to provide me with a copy.

Thanks

Denise

[Belgarath]

I don't have an actual copy of the letter itself, but here's the text if that's what you need?

LTR-RUL, PEN-RUL ¶50059, Letter Ruling 9437042, UIL No. 402.08-05 Taxability of beneficiary of employee’s trust, Rollover contributions, By a surviving

spouse, (June 22, 1994)

Letter Ruling 9437042, UIL No. 402.08-05 Taxability of beneficiary of employee’s trust, Rollover contributions, By a surviving spouse

Letter Ruling 9437042

June 22, 1994

CCH IRS Letter Rulings Report No. 916

09-22-94

Symbol: CP:E:EP:R:10

Uniform Issue List Information:

0402.08-05

Taxability of beneficiary of employee’s trust

Rollover contributions

By a surviving spouse

UIL No. 402.08-05 Taxability of beneficiary of employee’s trust, Rollover contributions, By a surviving spouse

 This is in response to your *****, request for private letter ruling, submitted by your authorized representative, as supplemented by correspondence dated *****, in which you request a letter ruling under sections 402©(1) and 402©(9) of the Internal Revenue Code. The following facts and representations have been submitted in support of your ruling request. Taxpayer A participated in Plan X which was sponsored by Company C. Company C and certain of its affiliates participated in Plan X. Plan X is a defined contribution plan which your authorized representative asserts is qualified under section 401(a) of the Code. Section 4.6 of Plan X permits a Plan X participant to name the beneficiary(ies) of his benefits thereunder. Section 8.1(a) of Plan X permits a participant’s Plan X benefits to be paid in a lump sum. Taxpayer A died on *****. Taxpayer A had not retired at the time of his death, and was not receiving benefits from Plan X when he died. Taxpayer A was survived by his wife, Taxpayer B. Taxpayer B is a co-executor of Taxpayer A’s estate. On *****, Taxpayer B consented to Taxpayer A’s designating his estate as the beneficiary of his Plan X account balance at his death. As a result of said consent, Taxpayer A’s estate is the beneficiary of his Plan X account balance. Article Fourth of Taxpayer A’s last will and testament creates Trust Z. Taxpayer B is a co-trustee of Trust Z. Under the terms of Taxpayer A’s will, the residuary of his estate, including his Plan X account balance, is to be paid to Trust Z. Taxpayer A’s Plan X account balance has not been distributed as of the date of this ruling request. Article Fourth(1) of Taxpayer A’s last will and testament provides that the income from Trust Z is to be paid to Taxpayer B. Article Fourth(2) provides that the trustees of Trust Z, excluding Taxpayer B, have the discretion to withdraw from the principal of Trust Z and pay said principal to Taxpayer B in “such amount or amounts as may be deemed necessary or desirable for medical, surgical, hospital, nursing or other expenses relating to any illness of, accident to or emergency affecting my said wife or as may be determined necessary or desirable for her comfort, care and well-being.”  Article Fourth(3) of Taxpayer A’s will contains a similar provision relating to the payment of Trust Z principal to the children of Taxpayer A and the issue of such children. Taxpayer A’s estate intends to execute and file with the Surrogate’s Court of County D of State Y a disclaimer and renunciation of all of its right, title, and interest in Plan X. Taxpayer B intends to disclaim and renounce her right, title, and interest in the income of Trust Z relating to Plan X, and will also disclaim and renounce her power of withdrawal in the principal of Trust Z relating to Plan X. A copy of Taxpayer B’s disclaimer will be given to the other trustees of Trust Z. All of the other living beneficiaries of Trust Z also intend to renounce and disclaim their interests in Trust Z to the extent said interests consist of Trust Z’s interest in Plan X. No disclaimant will have received any benefit or interest of any kind from Plan X prior to execution and filing of the above-referenced disclaimers. All of the above disclaimers and renunciations are contingent upon approval by the above-referenced Surrogate’s Court. Your authorized representative asks us to assume that all of the above disclaimers and renunciations are, for purposes of this ruling request, to be considered valid under the laws of State Y. Upon completion of all of the above actions, pursuant to applicable provisions of Plan X, the Plan X administrator will distribute Taxpayer A’s Plan X account balance to Taxpayer B no later than December 31, 1994. Taxpayer B will then transfer said distribution to an individual retirement arrangement (IRA) maintained on her behalf within 60 days of receipt. Your authorized representative asserts that the distribution is in accordance with relevant Plan X provisions and that the rollover IRA will meet the requirements of section 408(a) of the Code. Based on the above facts and representations, you request the following letter ruling: Pursuant to sections 402©(1) and ©(9) of the Code, Taxpayer B will not be required to include in income for federal tax purposes for the year in which such amount is distributed to her, any portion of the amount distributed by Plan X to her after the disclaimers and renunciations described herein have been filed with the Plan X administrator, which was then transferred within 60 days of receipt to a IRA qualified under section 408(a) maintained on behalf of Taxpayer B. With respect to your ruling request, section 402(a) of the Code provides, in part, that the amount actually distributed to any distributee by any employees’ trust described in section 401(a) which is exempt from tax under section 501(a) shall be taxable to him in the taxable year of the distributee in which so distributed under section 72 (relating to annuities). Section 402©(1) of the Code provides, generally, that if any portion of the balance to the credit of an employee in a qualified trust is paid to him in an eligible rollover distribution, and the employee transfers any portion of the property he receives in such distribution to an eligible retirement plan, then such distribution (to the extent so transferred) shall not be included in gross income for the taxable year in which paid. Section 402©(4) of the Code defines “eligible rollover distribution” as any distribution to an employee of all or any portion of the balance to the credit of the employee in a qualified trust except the following distributions: (A) any distribution which is one of a series of substantially equal periodic payments (not less frequently than annually) made-- (i) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and the employee’s designated beneficiary, or (ii) for a specified period of 10 years or more, and (B) any distribution to the extent the distribution is required under section 401(a)(9). Section 402©(8) of the Code defines eligible retirement plan as (i) an individual retirement account described in section 408(a), (ii) an individual retirement annuity described in section 408(b) (other than an endowment contract), (iii) a section 401(a) of the Code qualified retirement plan, and (iv) an annuity plan described in section 403(a). Section 402©(3) of the Code provides, generally, that section 402©(1) shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed. Section 402©(9) of the Code provides, generally, if a distribution attributable to an employee is paid to the spouse of the employee after the employee’s death, section 402© of the Code will apply to such distribution in the same manner as if the spouse were the employee except that the spouse shall transfer such distribution only to a section 408(a) individual retirement account or a section 408(b) individual retirement annuity. Section 2518 of the Code sets forth the requirements that must be met for a disclaimer to be treated as a qualified disclaimer for federal estate and gift tax purposes. Section 2518(a) of the Code provides that if a person makes a qualified disclaimer with respect to any interest in property, then such interest will be treated as if it had never been transferred to the disclaimant. Instead, the interest will be considered as passing directly from the decedent to the person entitled to receive the property as a result of the disclaimer. Section 2518(b) of the Code defines the term “qualified disclaimer” to mean an irrevocable and unqualified refusal by a person to accept an interest in property but only if: (1) such refusal is in writing; (2) such writing is received by the transferor of the interest, the transferor’s legal representative, or the holder of the legal title to the property to which the interest relates generally not later than the date that is nine months after the date on which the transfer creating the interest in such person is made; (3) such person has not accepted the interest or any of its benefits, and (4) as a result of such refusal, the interest passes without any direction on the part of the person making the disclaimer to either the spouse of the decedent or to a person other than the disclaimant. Section 2518©(3) of the Code provides that a written transfer of a transferor’s entire interest in property that meets the requirements of paragraphs (2) and (3) of section 2518(b), and that is to a person or persons who would have received the property had the transferor made a qualified disclaimer described in section 2518(b), shall be treated as a qualified disclaimer. In the present case, Plan X provides that the surviving spouse of a deceased plan participant is entitled to receive that participant’s account balance upon his death in the absence of a named beneficiary. Taxpayer B is the surviving spouse of Taxpayer A. Taxpayer B contends that after appropriate disclaimers are filed, pursuant to this provision of Plan X, Taxpayer B will receive a distribution from Plan X of Taxpayer A’s account balance under Plan X. Taxpayer B represents that she will then transfer such distribution to her own IRA no later than the 60th day following the day of receipt of the Plan X distribution. With respect to the disclaimer by Taxpayer A’s estate, in general, the executor of a decedent’s estate, acting as a decedent’s personal representative, can make a qualified disclaimer under section 2518 with respect to any interests in property that the decedent could have disclaimed if the decedent had survived, assuming all of the requirements of section 2518 are satisfied. Section 25.2518-1(b). However, in the present case, Taxpayer A’s interest in the Plan was established years prior to his death. During this period, Taxpayer A exercised dominion and control over his interest in the Plan. Accordingly, under these circumstances, the estate’s purported disclaimer is not a qualified disclaimer under section 2518. With respect to the disclaimers by Taxpayer B and the living beneficiaries of Trust Z, these disclaimers have not been filed as of the date of this ruling request which date is beyond the date that is 9 months after the date of Taxpayer A’s date of death. As a result, the disclaimers cannot constitute qualified disclaimers within the meaning of section 2518(b) of the Code nor do the disclaimers constitute transfers within the meaning of section 2518© of the Code. If the above described disclaimers (not including the estate’s disclaimer) were qualified disclaimers within the meaning of section 2518(b) of the Code, and if all necessary parties (i.e. the unborn heirs) had disclaimed their interests in the Plan X proceeds under Trust Z, then, for purposes of Code section 402©, we would treat the right to receive benefits from Plan X as having passed directly to Taxpayer B as if Taxpayer A’s estate and Trust Z never had been named as the Plan X beneficiary and payee respectively. However, since the disclaimers fail to satisfy the requirements of section 2518(b), we will treat the Plan X distribution as passing to Taxpayer A’s estate, then being paid to Trust Z, and then being transferred from Trust Z to Taxpayer B. Thus, Taxpayer B will not be treated as the distributee of Taxpayer A’s Plan X interest for purposes of section 402© of the Code. Thus, based on the foregoing, we conclude, with respect to your ruling request, that: That Taxpayer B is ineligible to roll over pursuant to section 402©(9) of the Code any portion of the amount distributed by Plan X to Taxpayer A’s estate, then paid to Trust Z, and then transferred from Trust Z to her after the disclaimers and renunciations described herein have been filed with the Plan X administrator. 

We express no opinion at this time whether the disclaimers by Taxpayer B and the beneficiaries of Trust Z would satisfy the other requirements of

section 2518. We also express no opinion whether these disclaimers, as well as the estate’s disclaimer, would be valid under state law. Further, we

express no opinion with respect to the federal gift tax consequences of the transfer by the beneficiaries of Trust Z to Taxpayer B of the beneficiaries’

interests in Trust Z during the lifetime of Taxpayer B and of their remainder interests at her death.

This ruling letter is based on the assumption that Plan X will be qualified under section 401(a) of the Code at all times pertinent thereto.

A copy of this letter has been sent to your authorized representative in accordance with a power of attorney on file in this office.

Sincerely yours, John G. Riddle, Jr., Acting Chief, Employee Plans Rulings Branch.

[Appleby]

Thanks much

Denise