Death, Rollover and RMD

[masteff]

I would agree that the PLR does further confirm a rollover can be made during the first 4 years.

However.... the PLR also says that particular spouse is not converting the IRA to her own and is commencing distributions prior to age 59 1/2, which is well before the required beginning date. These are two factors which make the PLR materially different from the situation in the original post of this thread.

The PLR does not begin to address the situation of the spouse revoking the 5-yr election when such election is made after the required beginning date.

54.4974 is about excise taxes... it has no precedence over 1.401(a)(9).

[Guest mjb]

I would agree that the PLR does further confirm a rollover can be made during the first 4 years.

However.... the PLR also says that particular spouse is not converting the IRA to her own and is commencing distributions prior to age 59 1/2, which is well before the required beginning date. These are two factors which make the PLR materially different from the situation in the original post of this thread.

The PLR does not begin to address the situation of the spouse revoking the 5-yr election when such election is made after the required beginning date.

54.4974 is about excise taxes... it has no precedence over 1.401(a)(9).

1. What PLR are you referring to? In PLR 200242044 the IRS allowed the surviving spouse to rollover the remainder of deceased H's IRA to her own IRA at the end of the fourth year even though she had taken taxable distributions in first three years after H's death. The 5 year rule permitted in Reg 1.401(a)(9)-3 A-1 applies to employer sponsored plans as well as IRAs.

2. Where is there a revocation of the 5 yr election? Reg 54.4974-2 A-3© specifically states that the MRD does not occur until the 5th year after death. As prevously noted in PLR 200242044 distributions taken in year 4 could be rolled over without a revocation occurring. Under A-3 there is no revocation of the election of the 5 yr rule if funds are withdrawn before the 5th year after death. Under REg 1.401(a)(9)-7 Q/A-2 a rollover by a surviving spouse to the spouse's retirement account results in an increase to the spouse's account for the purposes of the MRDs to be received under the surviving spouse's plan interest. Under -7A-3 a rollover interest is treated as a reduction of the amount held under transferring plan.

3. Under Reg 1.401(a)(9)-3 A-1, the 5 year option can be elected by any beneficiary as long as the participant dies prior to April 1 of year following the year in which 70 1/2 is attained. Rev Rul 82-153 permits rollovers after age 70 1/2 is attained by the employee and under IRC 402©(9) rollovers by a spouse are permitted under the same terms as the employee.

4. How can you state that Reg 54.4974 is about excise taxes and has no precedence over 1.409(a)(9) when Reg 54.4974-2 A-3© states that if the 5 year rule in Section 401(a)(9)(B)(ii) applies to the distribution to a payee, no amount is required to be distributed for any calendar year to satisfy the enumerated requirements in Reg 1.401(a)(9)-5 until the calendar year which contains the date 5 years after the date of the employee's death?

[masteff]

End of argument. You're welcome to your opinion. I'm welcome to disagree with it. Good-bye.