In PLR 201923002, the Service ruled that while the taxpayer maintained control of the proceeds of her deceased spouse’s IRA through her designation as sole trustee over the trust containing the IRA, the decedent’s IRA was not an inherited IRA under Code Sec. 408(d)(3).
The PLR fact summary is as follows:
Decedent was married to Taxpayer until his death, at which time both Decedent and Taxpayer were over 70 1⁄2 years old.
At the time of his death, Decedent owned an individual retirement account, Decedent’s IRA. The beneficiary of Decedent’s IRA was Taxpayer’s Trust. Taxpayer is the sole trustee and beneficiary of Taxpayer’s Trust which provides that Taxpayer has the right to withdraw its net income and/or its principal. Taxpayer has the right to modify, amend, or revoke Taxpayer’s Trust at any time and has the sole authority and discretion to distribute the Decedent’s IRA proceeds to herself at any time. Taxpayer intends to roll the amounts paid to her from Decedent’s IRA to an IRA in her own name.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..