Beneficiary naming Benficiary

[Guest LMH]

Does anyone have any information on the PLR being referenced in 7/19/99 Wall Street Journal article? The article didn't seem to say anything that hasn't already been beat to death, but I would like to read the ruling. An expected publication date, or even better a reference number would be helpful.

[Kathy]

Could you go into a little more detail about the article? I haven't seen anything and probably need to read it!!

Thanks!

[Guest LMH]

The article refers to a yet to be published PLR from the IRS, ruling that a non-spouse beneficiary can name a beneficiary. WSJ is the only place I have seen this, which I find odd considering this is the first time the IRS has ruled on this subject. The article ran in the FUND TRACK column written by Lynn Asinof in the 7/19/99 issue.

[Guest J Singletary]

I subscribe to an IRA hotline service. They say that the PLR has been issued to the taxpayer and the IRS is in the process of formatting the letter (deleting personal info.) for publication. So, the IRS should be releasing it any day now.

The service tells me the PLR request actually asked for approval of the IRA Grantor giving "power of appointment" to the beneficiary. I always thought this made the IRA taxable... but perhaps it depends on how the power of appointment is worded.

I'm as anxious as you are to see this PLR.

[BPickerCPA]

Re: Power of Appointment

If the beneficiary can assign the benefits to another person while he is alive, that's a no no.

But SOMEONE is going to get the benefits if the beneficiary dies. The only issue is whether that benefit is passed via will (where I haven't heard there being a problem) or via some other method of testamentary disposition (e.g. beneficiary's beneficiary designation; power of appointment, etc).

[Guest P A Weick]

The ruling is PLR 199936052.

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[Gary Lesser]

Yes. That ruling only clarified that once the owner dies, the "designated beneficiary" for RMD purposes may not be changed. The first beneficiary could name a contingent beneficiary to receive any remaining interest upon his death. The ruling is dated June 16, 1999, but was just recently released

[Gary Lesser]

I have no problem with IRA beneficiaries naming beneficiaries (to take any interest they may have or get) whether the original IRA owner is alive or not if the documents so permit. Whether for RMD purposes the account has a "designated" beneficiary is a totally different matter. If a beneficiary can appoint/substitue another to take their place then such person or persons are NOT "designated beneficiaries" and distribution options upon owner's death are therefore fewer (at least as rapidly or 5 years i wd imagine are the longest).

[This message has been edited by Gary Lesser (edited 10-15-1999).]

[Guest Parker]

Does anyone have Letter Ruling 199936052 or know where it can be found on the Internet? I checked the IRS site and I can't find it there. I read a writeup of the ruling by Practitioners Publishing Company [on today's BenfitsLink page] but don't understand why it would make a difference whether the original account holder names a contingent beneficiary. Under our IRA document, once the original account holder dies, the IRA effectively becomes the Primary Beneficiary's IRA, and the Contingent Beneficiary (if any) has no right to the IRA. If the Primary Beneficiary dies with assets remaining in the IRA, the assets would go to his estate or to the beneficiary he named, not to the original account holder's Contingent Benficiary.