Spliting a Roth IRA into separate ROTH IRAs by beneficiaries.

[Guest Rick Holmes]

My mother converted her IRA to a Roth IRA in 1998. She passed away in March 2000. My brother and I are the only beneficiaries. We want to equally divide her Roth IRA into separate ROTH IRAs. Her attorney said we would have to get a special ruling from the IRS to assure that a disqualification did not occurr. Surely this situation has already occurred. I have two questions. (1) does anyone know of such a ruling having already taken place, and (2) my mother's attorney said we would have to pay the IRS a "user fee" for ruling on this at a cost of $3,500. Why does a taxpayer have to pay the IRS to do their job? Is this correct?

[BPickerCPA]

There is a user fee to get an official IRS ruling, but I don't believe it is that high.

My opinion is that you don't need a ruling. This has been approved so many times it isn't funny. What you may need is a new attorney.

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Barry Picker, CPA/PFS, CFP

New York, NY

www.BPickerCPA.com

[Guest Judy Z]

Believe if accounts are separated still need to leave your Mother's name on each account and indicate separate beneficiary.

Assuming she was using 4 year spread to pay the tax on the conversion, the remaining balance is shown as income on her final return.

[Bruce Steiner]

In addition to the IRS user fee for a ruling (which is several thousand dollars, with an exception for low income taxpayers), it also costs several thousand dollars in legal fees to prepare the ruling request.

If you are having a problem dealing with the IRA custodian, a ruling may help you in that regard.

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Bruce Steiner, attorney

(212) 986-6000 (NY office)

(201) 862-1080 (NJ office)

also admitted in FL