IRS Rules IRA Rollover Okay Even Though Taxpayer Was Deceased
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IRS regulations allow an owner of an IRA to withdraw it for purposes of transferring it to another institution provided that the funds are placed in the new institution within 60 days. This is called a “rollover,” as opposed to a trustee to trustee transfer, which is when the account funds are transferred directly from one company to another.
This is an area where many taxpayers get into trouble for not following the rules. Generally the IRS is very strict in enforcing the rollover rules, but relief is allowed in certain situations, usually where there was no fault of the taxpayer involved.
In a recent Private Letter Ruling (PLR 200717021), the IRS ruled that a “rollover” by a surviving spouse, who was also the administratrix of the decedent’s estate, was a valid rollover within the 60-day period even thought the taxpayer was deceased at the time of the rollover.
Private Letter Rulings can only be relied upon by the requesting taxpayer, but they serve as a good indication of how the IRS would rule in similar situations.
