May 5, 2022 4:43 am

Surviving Spouse Can Rollover IRA Payable to Owner’s Estate

An IRA owner named himself as beneficiary of his account. When he died, the account went into his estate of which his surviving spouse was the sole heir and sole administrator. She wanted to roll over the account to her own name and the IRS said yes (Letter Ruling 202214008).

Generally, if a decedent’s IRA proceeds pass through a third party (e.g., an estate), and then are distributed to the decedent’s surviving spouse, the surviving spouse is treated as having received the IRA proceeds from the third party and not from the decedent’s IRA and would be ineligible to roll over the IRA proceeds into his/her own IRA. However, the general rule does not apply where the decedent’s estate is the beneficiary of IRA proceeds but the surviving spouse is the sole independent administrator of the estate and the sole beneficiary of the IRA proceeds that pass through the estate. The reason: No third party can prevent the surviving spouse from receiving the proceeds of the IRA and from rolling over the proceeds into the surviving spouse’s own IRA.

Tax Glossary

Involuntary conversion

Forced disposition of property due to condemnation, theft, or casualty. Tax on gain from involuntary conversions may be deferred if replacement property is purchased.

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