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INDIVIDUALS

account be paid out in full by the end of in the same year and failed to roll over be named as the primary beneficiary. In
the year that includes the 10-year an- either distribution. Her spouse had pre- three recent letter rulings, however, the
niversary of the death. Requiring RMDs viously managed her financial affairs, IRS allowed IRAs with estate or trust
for each of the 10 years and the remain- but he had died before the distributions beneficiaries to be rolled over by the
ing balance in the 10th year — which were taken. After the 60-day rollover surviving spouse.
applies if the decedent was receiving period had expired, the taxpayer had re- Estate named as beneficiary:
RMDs before death — surprised many. covered enough from her health prob- In IRS Letter Ruling 202210016, the
Notice 2022-53 was welcome es- lems to ask for help with her finances decedent named his estate as an IRA
pecially because deferring the effective and submit a ruling request for a waiver beneficiary. His surviving spouse was
date of the proposed regulations served of the 60-day rollover requirement, authorized by the probate court to
to eliminate the specter of 50% penal- which included medical and other doc- administer the estate; she was the only
ties for beneficiaries who did not take umentation in support of her request. estate beneficiary. The IRS concluded
RMDs in 2021 and 2022, being unaware The IRS waived the requirement and that since the taxpayer/spouse was both
they were subject to the year-by-year allowed the taxpayer additional time to the sole administrator of the estate and
version of the 10-year rule. This change roll over both distributions. the sole beneficiary of the decedent’s
in the effective date, along with the pro- Rollover allowed for fraud vic- IRA proceeds that passed through the
vision of the proposed regulations that tim: In IRS Letter Ruling 202244029, estate, no third party could prevent the
allows an IRA beneficiary to take the the taxpayer failed to roll over funds spouse from receiving the benefits and
decedent’s date-of-death RMD before in a timely manner because she was rolling them into an IRA. A tax-free
the extended due date of the beneficia- the victim of fraud. Under the highly rollover was allowed to her exist-
ry’s return for the year of the decedent’s complex scheme, a computer alert ing IRA.
death, prevented many heirs from being supposedly directed her to contact a Estate beneficiary by
subject to the 50% penalty imposed by financial institution. The alert told her default: The decedent opened an
Sec. 4974.69 The notice indicates that that hackers had put illegal informa- IRA and named himself as the benefi-
the final regulations will apply no earlier tion on her computer and withdrawn ciary, according to IRS Letter Ruling
than the 2023 distribution year. funds. She was directed to contact 202214008. At his death, the custodian
another person who was purportedly transferred the IRA to a beneficiary
Sec. 402(c): Rules applicable with her bank’s anti-fraud department. account in the name of the decedent’s
to rollovers from exempt That person told the taxpayer she had estate. He had not reached age 72, so
trusts to secure her funds and that illegal benefits ordinarily would have been
The IRS received so many ruling material on her computer was a federal subject to the five-year rule. However,
requests to waive the 60-day rollover crime. She was referred to a third per- he left a will that named his surviving
requirement that it released Rev. Proc. son who claimed to be a federal officer spouse as the sole beneficiary of his
2016-47, which contains a procedure for who promised to write her a check to estate and executor. In an analysis simi-
eligible taxpayers to self-certify that they reimburse her for withdrawals made lar to the item above, the IRS allowed
are eligible for a waiver. The procedure from her accounts. She was told she the spouse to have the beneficiary IRA
for self-certification was updated in would be arrested if she contacted law transferred to a new IRA in her name,
2020 by Rev. Proc. 2020-46. As a result, enforcement. Ultimately, she contacted with no adverse tax consequences.
fewer requests for relief are seen. How- authorities to report the fraud. The IRS Sole beneficiary: In IRS Let-
ever, letter rulings were issued in 2022 waived the 60-day rollover requirement ter Ruling 202227005, the decedent’s
for two requests that did not fit exactly and allowed the taxpayer additional IRA was payable to a joint trust that
into the revenue procedure’s framework. time for the rollover. provided that any retirement assets
Medical condition and death would be allocated to the survivor’s
of spouse: In IRS Letter Ruling Sec. 408(d)(3): Rollover trust portion after the first death. The
202218028, the taxpayer had a severe contribution decedent’s two IRAs were transferred
medical condition diagnosed before the In general, for a surviving spouse to roll to a new inherited IRA at his death.
tax year in question. She withdrew an over a retirement benefit into his or her With respect to the new IRA allocated
amount from her 401(k) and her IRA retirement account, that spouse should to the survivor’s trust, the taxpayer had

69. Prop. Regs. Sec. 54.4974-1(g)(3). For tax years beginning after Dec. 29, 2022, the penalty is reduced to 25% (10% if the failure is corrected timely), by the
SECURE 2.0 Act (Division T of the Consolidated Appropriations Act, 2023, P.L. 117-328).

42 March 2023 The Tax Adviser