Surviving spouse who is sole executor and sole estate beneficiary may roll over inherited IRAs into her own IRA

Plain-English summary

A person died before reaching age 73, leaving several IRAs that named the estate
as the primary beneficiary. The surviving spouse was both the sole executor of the
estate and the sole beneficiary of everything the estate received. Normally, when
IRA money passes through an estate before reaching a surviving spouse, the spouse
is treated as inheriting it from the estate (a third party), which blocks the
spouse from doing the favorable "roll it into my own IRA" move reserved for
surviving spouses. The IRS applies an exception: when the spouse controls the
estate as sole executor and is also the sole beneficiary, no third party stands in
the way, so the spouse is treated as receiving the IRAs directly from the deceased.
The IRS ruled the spouse may withdraw the IRA proceeds and roll them into IRAs in
her own name within 60 days, and that timely rolled-over amounts will not be
taxable income (except for any conversion to a Roth IRA). This lets a widow or
widower consolidate a spouse's retirement accounts and keep deferring tax, even
when the estate was technically the named beneficiary.

Ruling snapshot

• Question: May a surviving spouse who is the sole executor and sole beneficiary of the estate roll over the decedent's estate-payable IRAs into her own IRAs tax-free within 60 days?
• Outcome: Approved (all three rulings granted)
• Key authorities: IRC § 408(d)(1), (d)(3)(A)(i), (d)(3)(B), (d)(3)(C); IRC § 408A(d)(3); Rev. Proc. 2024-1

Full text (IRS public release)

Internal Revenue Service                         Department of the Treasury
                                                 Washington, DC 20224

Number: 202508002                                Third Party Communication: None
Release Date: 2/21/2025                          Date of Communication: Not Applicable
Index Number: 408.03-00
                                                 Person To Contact:
---------------------------                      --------------------------, ID No. ----------------
---------------------                            -----------------
------------------------------                   Telephone Number:
                                                 --------------------
                                                 Refer Reply To:
In Re: Private Letter Ruling Request             CC:EEE:EB:QP4
                                                 PLR-108293-24
                                                 Date:
                                                 October 28, 2024


LEGEND

Taxpayer = ---------------------------

Decedent = --------------------------

Date 1 = --------------------

Date 2 = --------------------


Dear ----------------:

This is in response to your letter dated April 24, 2024, submitted on your behalf by your
authorized representative, in which you request rulings under section 408 of the Internal
Revenue Code.

The following facts and representations have been submitted under penalties of perjury
in support of the rulings requested:

Decedent was born on Date 1. Decedent died testate on Date 2, prior to attaining age

73. Prior to Date 2, Decedent established several IRAs. With respect to each of the
IRAs, Decedent designated Decedent's estate as the primary beneficiary and Taxpayer
as the secondary beneficiary.

Item II of Decedent's Will permits Decedent to grant personal effects to intended
distributees in accordance with the list (if any) attached to, or enclosed with, Decedent's
Will. Item II states that if no such list is attached to, or enclosed with, Decedent's Will,
then it shall be presumed that no such list exists. You represent that Decedent's Will,
that is certified by Court Order Admitting Will to Probate in Solemn Form in the Probate
Court of the County of Coweta, State of Georgia, does not include such list.
PLR-108293-24                                  2

Item III of Decedent's Will bequeaths the residue and remainder of Decedent's estate to
Taxpayer.

Item IV of Decedent's Will names Taxpayer as sole executor of the Will. When the Will
was submitted to probate, Taxpayer was appointed as the sole personal representative
of Decedent's Estate.

You represent that Decedent's IRAs are currently held in inherited IRAs in Decedent's
name for the benefit of Decedent's estate. Taxpayer intends to request the distribution
of the assets of the IRAs to Taxpayer as sole beneficiary and executor of Decedent's
estate and, within 60 days of receipt of the distribution, roll over the distributions to one
or more IRAs in Taxpayer's own name.

Rulings Requested

Based on the facts and representations, the following rulings were requested:

    1.   Taxpayer, as Decedent's spouse, will be treated as having acquired Decedent's
        IRAs directly from Decedent, and not from the Decedent's estate.
    2.   Taxpayer is eligible to roll over Decedent's IRAs into one or more IRAs
        established and maintained in Taxpayer's own name pursuant to section
        408(d)(3)(A)(i), provided that the rollover occurs no later than 60 days after the
        proceeds of Decedent's IRAs are distributed.
    3.   Taxpayer will not be required to include in gross income for federal tax purposes,
        for the year in which the distribution of Decedent's IRAs occurs, any portion of
        the proceeds distributed from Decedent's IRAs that are timely rolled over into
        one or more IRAs set up and maintained in Taxpayer's name.

Law

With respect to your ruling requests, section 408(d)(1) provides that, except as
otherwise provided in section 408(d), any amount paid or distributed out of an IRA shall
be included in gross income by the payee or distributee, as the case may be, in the
manner provided under section 72.

Section 408(d)(3) provides that section 408(d)(1) does not apply to a rollover
contribution if such contribution satisfies the requirements of section
408(d)(3)(A) and (B).

Section 408(d)(3)(A) provides that section 408(d)(1) does not apply to any amount paid
or distributed out of an IRA to the individual for whose benefit the account is maintained
if (i) the entire amount received (including money and any other property) is paid into an
IRA for the benefit of such individual not later than the 60th day after the day on which
he receives the payment or distribution or (ii) the entire amount received (including
PLR-108293-24                                 3

money and any other property) is paid into an eligible retirement plan for the benefit of
such individual not later than the 60th day after the date on which the payment or
distribution is received, except that the maximum amount which may be paid into such
plan may not exceed the portion of the amount received which is includible in gross
income (determined without regard to section 408(d)(3)).

Section 408(d)(3)(B) provides that section 408(d)(3) does not apply to any amount
described in section 408(d)(3)(A)(i) received by an individual from an IRA if at any time
during the one-year period ending on the day of such receipt such individual received
any other amount described in section 408(d)(3)(A)(i) from an IRA which was not
includible in his gross income because of the application of section 408(d)(3).

Section 408(d)(3)(C)(i) provides, in pertinent part, that, in the case of an inherited IRA,
section 408(d)(3) shall not apply to any amount received by an individual from such
account (and no amount transferred from such account to another IRA shall be
excluded from gross income by reason of such transfer), and such inherited account
shall not be treated as an IRA for purposes of determining whether any other amount is
a rollover contribution.

Section 408(d)(3)(C)(ii) provides that an IRA shall be treated as inherited if the
individual for whose benefit the account is maintained acquired such account by reason
of the death of another individual, and such individual was not the surviving spouse of
such other individual.

Section 408A(d)(3) contains a special rule that applies for a rollover to a Roth IRA from
a non-Roth IRA, which provides in part that, notwithstanding section 408(d)(3), there
shall be included in gross income any amount which would be includible were it not part
of a qualified rollover contribution.

Analysis

Generally, if a decedent's IRA proceeds pass through a third party, for example, an
estate, and then are distributed to the decedent's surviving spouse, the surviving
spouse will be treated as having received the IRA proceeds from the third party and not
from the decedent's IRA. Thus, generally, a surviving spouse will not be eligible to roll
over the IRA proceeds into the spouse's own IRA.

However, the general rule will not apply where the decedent's estate is the beneficiary
of a decedent's IRA proceeds, and the decedent's surviving spouse is the sole executor
of the estate and the sole beneficiary of the IRA proceeds that pass through the estate.
Under these circumstances 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.
PLR-108293-24                                4

Under the facts presented, the Decedent's IRAs are payable to Decedent's estate under
the terms of Decedent's will. Item III of Decedent's Will gives all of Decedent's estate to
Taxpayer, Decedent's spouse. Item IV of Decedent's Will names Taxpayer as sole
executor of the Will. The Will was admitted to probate and Taxpayer was appointed sole
personal representative of Decedent's estate. In that capacity, Taxpayer can cause the
Decedent's IRA proceeds to be paid to Decedent's estate and then to Taxpayer as
beneficiary of the estate. Accordingly, for purposes of section 408(d)(3)(A), Taxpayer is
effectively the individual for whose benefit Decedent's IRAs are maintained. Thus, if
Taxpayer receives Decedent's IRA proceeds, Taxpayer may roll over the proceeds into
one or more IRAs maintained in Taxpayer's name, provided that all other applicable
rules of section 408(d)(3) are met.

With respect to your first ruling request, Taxpayer is the surviving spouse of Decedent.
Therefore, Taxpayer will be treated as having acquired Decedent's IRAs directly from
Decedent, and not from the Decedent's estate.

With respect to your second ruling request, as concluded above, Taxpayer may roll over
the Decedent's IRA proceeds received by Taxpayer to one or more IRAs set up and
maintained in Taxpayer's name, provided the rollover occurs no later than the 60th day
from the day the proceeds of Decedent's IRAs are distributed.

With respect to your third ruling request, section 408(d)(1) provides that, except as
otherwise provided under section 408(d), any amount paid or distributed out of an IRA
shall be included in the gross income by the payee or distributee. Section 408(d)(3)(A)(i)
provides that section 408(d)(1) does not apply to a rollover contribution meeting the
requirements of section 408(d)(3). As concluded in the second ruling described above,
Taxpayer may roll over the Decedent's IRA proceeds in accordance with section
408(d)(3). Therefore, except in the case of a rollover from a non-Roth IRA to a Roth
IRA, Taxpayer will not be required to include in Taxpayer's gross income any portion of
Decedent's IRA proceeds timely rolled over to an IRA set up and maintained in
Taxpayer's name.

Rulings

Therefore, with respect to your ruling requests, we conclude that:

    1. Taxpayer will be treated as having acquired Decedent's IRAs directly from
      Decedent, and not from the Decedent's estate.
    2. Taxpayer is eligible to roll over the proceeds of Decedent's IRAs to one or more
      IRAs set up and maintained in Taxpayer's own name pursuant to section
      408(d)(3)(A)(i), as long as the rollover occurs no later than 60 days after the
      proceeds from Decedent's IRAs are distributed.
    3. Except in the case of a rollover to a Roth IRA, Taxpayer will not be required to
      include in gross income any portion of the proceeds distributed from Decedent's
PLR-108293-24                                  5

         IRAs that are timely rolled over to an IRA set up and maintained in Taxpayer's
         name.

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party, as specified in Rev. Proc. 2024-1, 2024-1 IRB 1, § 7.01(16)(b).
This office has not verified any of the material submitted in support of the request for
rulings (including the validity of Decedent's Will), and such material is subject to
verification on examination. The Associate office will revoke or modify a letter ruling and
apply revocation retroactively if there has been a misstatement or omission of
controlling facts; the facts at the time of the transaction are materially different from the
controlling facts on which the rulings was based; or, in the case of a transaction
involving a continuing action or series of actions, the controlling facts change during the
course of the transaction. See Rev. Proc. 2024-1, § 11.05.

Except as specifically set forth above, no opinion is expressed or implied concerning the
federal tax consequences of any aspect of any transaction or item discussed or
referenced in this letter ruling.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.


                                       Sincerely,


                                       Brandon Ford
                                       Senior Technician Reviewer, Qualified Plans
                                       Branch 4
                                       (Employee Benefits, Exempt Organizations, and
                                       Employment Taxes)

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