Traditional IRA naming an estate as beneficiary. At death the dollars are paid out to the estate. If the estate pays the spouse, can the spouse rollover the dollars to his/her own IRA? Is there a 60 day time frame? What about for a non spouse? What are the payout options since they can not roll the money? (Before and after RBD date on last question).

NO, the spouse CANNOT "roll over" any IRA received from her husband UNLESS SHE WAS THE "DESIGNATED BENEFICIARY".



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John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO

Rule Number One:

If the IRA owner's death was prior to Required Beginning Date, the ENTIRE amount of the IRA must be distributed by 12/31 of the year following the death of the IRA owner, as there was no "designated beneficiary".

Rule Number Two: If death was before the RBD, the Five Year Rule applies. Distributions must be taken before 12/31 of the fifth year following the year of death. No exceptions are available, as there was no "designated beneficiary".

IRC 401(a)(9)(B)(ii)




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John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO

NUTS!

In the previous response, please read "after" instead of "before".

I GOTTA learn to check my stuff before posting it.



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John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO

This is REALLY silly!

My CORRECTION was IN ERROR!

The first paragraph, in which it's explained that a total distribution is required by 12/31 of the year following death, applies if death was AFTER the RBD.

The second paragraph, mentioning the Five Year Rule, applies when death is BEFORE the RBD.

I will quit now, and go soak my head.



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John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO

While John is essentially correct that the spousal rollover only applies if the spouse was a DESIGNATED BENEFICIARY, the IRS in private letter rulings has permitted the spouse to do a spousal rollover when (1) the estate was the beneficiary, (2) the spouse was the executrix, AND (3) the spouse is the only heir of the estate.

Now while this may sound like "no harm, no foul" (the spouse got the rollover anyway), consider the cost of getting the PLR and how it could have simply been avoided by taking the time to write "MY SPOUSE" in the stupid beneficiary area of the IRA application. Makes you wonder where some people's heads are at. (GREAT English!!)

The general rule is "no." But there are many exceptions. For more details, see my article on this subject in the October 1997 issue of Estate Planning.

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Bruce Steiner, attorney
(212) 986-6000 (NY office)
(201) 862-1080 (NJ office)
also admitted in FL