Surviving spouse may roll inherited retirement plan assets paid through the estate into her own IRA

Plain-English summary

A surviving spouse usually gets favorable rollover treatment for a deceased spouse's retirement accounts, but here the accounts named the decedent's estate (not the spouse) as beneficiary, which normally blocks a spousal rollover. The wrinkle: the surviving spouse was both the sole personal representative of the estate and its sole beneficiary. The IRS ruled that because the spouse controls the estate and ultimately receives the money, the distributions are treated as paid to her, and under section 402(c)(9) she is treated as if she were the employee. As a result, she can roll the 401(a) and 403(b) plan assets into one or more IRAs in her own name, and as long as she completes the rollover within 60 days of the estate receiving the funds, none of it is included in her gross income that year. The ruling is limited to these facts and does not address any other tax consequences.

Ruling snapshot

• Question: Can a surviving spouse who is the sole personal representative and sole beneficiary of the estate roll her deceased spouse's plan assets (paid to the estate) into her own IRA tax-free?
• Outcome: Approved (all three requested rulings granted)
• Key authorities: IRC §§ 402(c)(1), 402(c)(9), 403(b)(8); eligible retirement plan defined in § 402(c)(8)(B)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202525008 Third Party Communication: None
Release Date: 6/20/2025 Date of Communication: Not Applicable
Index Number: 402.00-00, 402.08-00,
402.08-05 Person To Contact:
----------------------, ID No. -----------------
------------------------ Telephone Number:
------------------------- ---------------------
----------- Refer Reply To:
CC:EEE:EB:QP4
PLR-120336-24
Date:
March 25, 2025

LEGEND

Taxpayer = ------------------------
Decedent = -------------------
Plan 1 = ------------------------------------------------------------
Plan 2 = ------------------------------------------------------------
Plan 3 = ---------------------------------------------------------------------------------------

Custodian = ----------------
Date 1 = ------------------
Date 2 = --------------------------
Date 3 = ---------------------

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

This is in response to a request for a letter ruling under section 402(c) of the Internal
Revenue Code, submitted on your behalf by your authorized representative on October
14, 2024, and supplemented on January 7, 2025.

The following facts and representations have been submitted under penalties of perjury
in support of the rulings requested. Decedent died testate as a resident of the State of --
----------- on Date 1. Decedent was born on Date 2 and was less than 72 years old at the
time of death. Decedent was survived by his spouse, Taxpayer. Taxpayer was born on
Date 3 and is less than 73 years old.

At the time of Decedent's death, Decedent held retirement plan assets in Plan 1, Plan 2,
and Plan 3 (collectively referred to as "Decedent's Plans") maintained by Custodian.
Plans 1 and 2 are section 401(a) plans and Plan 3 is a section 403(b) plan.
PLR-120336-24 2

Decedent designated his estate as the sole beneficiary of Decedent's Plans. Decedent's
Last Will and Testament designates Taxpayer as the sole beneficiary to Decedent's
estate and residuary estate and also as Decedent's sole personal representative.
As the sole personal representative of Decedent's estate, Taxpayer intends to direct the
retirement plan assets from Decedent's Plans to Decedent's estate and then receive the
retirement plan assets as the sole beneficiary of Decedent's estate. Taxpayer intends to
roll over those same retirement plan assets into an IRA or IRAs maintained in
Taxpayer's name within 60 days of the date the retirement plan assets are received by
the estate.

REQUESTED RULINGS

Based on the above facts and representations, you, through your authorized
representative, request the following rulings:

1. Taxpayer will be treated as the payee or distributee of the retirement plan assets
   from Decedent's Plans.

2. Taxpayer, as Decedent's spouse, will be eligible to roll over the retirement plan
   assets from Decedent's Plans into an IRA or IRAs maintained in Taxpayer's
   name, if the rollover occurs no later than the 60th day after the date the
   retirement plan assets are received by Decedent's estate.

3. Taxpayer will not be required to include the above referenced distribution and
   rollover in Taxpayer's gross income for federal tax purposes in the year of such
   distribution and rollover.

LAW

Section 402(c)(1) provides, generally, that if any portion of an eligible rollover
distribution from a section 401(a) qualified retirement plan is transferred into an eligible
retirement plan, the portion of the distribution so transferred shall not be includible in
gross income in the taxable year in which paid.

Section 402(c)(2) provides that the maximum amount transferred to which paragraph (1)
applies shall not exceed the portion of such distribution which is includible in gross
income (determined without regard to paragraph (1)). The preceding sentence shall not
apply to such distribution to the extent—

(A) such portion is transferred in a direct trustee-to-trustee transfer to a qualified trust or
to an annuity contract described in section 403(b) and such trust or contract provides
for separate accounting for amounts so transferred (and earnings thereon), including
separately accounting for the portion of such distribution which is includible in gross
income and the portion of such distribution which is not so includible, or
PLR-120336-24 3

(B) such portion is transferred to an eligible retirement plan described in clause (i) or (ii)
of section 402(c)(8)(B).

In the case of a transfer described in subparagraph (A) or (B), the amount transferred
shall be treated as consisting first of the portion of such distribution that is includible in
gross income (determined without regard to paragraph (1)).

Section 402(c)(3) provides that section 402(c)(2) shall not apply to any transfer of a
distribution made after the sixtieth day following the day on which the distributee
received the property distributed. The Secretary may waive the 60-day requirement
under subparagraph (A) where the failure to waive such requirement would be against
equity or good conscience, including casualty, disaster, or other events beyond the
reasonable control of the individual subject to such requirement.

Section 402(c)(4) defines an eligible rollover distribution as any distribution to an
employee of all or any portion of the balance to the credit of the employee in a qualified
trust; except that such term shall not include—

(A) any distribution which is one of a series of substantially equal periodic payments (not
less frequently than annually) made —

(i) for the life (or life expectancy) of the employee or the joint lives (or joint life
expectancies) of the employee and the employee's designated beneficiary, or (ii) for
a specified period of 10 years or more,

(B) any distribution to the extent such distribution is required under section 401(a)(9),
and

(C) any distribution which is made upon hardship of the employee.

Section 402(c)(8)(B) defines an eligible retirement plan as (i) an individual retirement
account described in section 408(a), (ii) an individual retirement annuity described in
section 408(b) (other than an endowment contract), (iii) a qualified trust, (iv) an annuity
plan described in section 403(a), (v) an eligible deferred compensation plan described
in section 457(b) which is maintained by an eligible employer described in section
457(e)(1)(A), and (vi) an annuity contract described in section 403(b).

Section 402(c)(9) provides that if any distribution attributable to an employee is paid to
the spouse of the employee after the employee's death, section 402(c) will apply to such
distribution in the same manner as if the spouse were the employee.

Section 403(b)(8)(A) provides that, if (i) any portion of the balance to the credit of an
employee in an annuity contract described in section 403(b)(1) is paid to him in an
eligible rollover distribution (within the meaning of section 402(c)(4)), (ii) the employee
transfers any portion of the property he receives in such distribution to an eligible
PLR-120336-24 4

retirement plan described in section 402(c)(8)(B), and (iii) in the case of a distribution of
property other than money, the property so transferred consists of the property
distributed, then such distribution (to the extent so transferred) shall not be includible in
gross income for the taxable year in which paid.

Section 403(b)(8)(B) provides that the rules of section 402(c)(2)-(7), (9), and (11), as
well as section 402(f), apply for purposes of section 403(b)(8)(A), except that section
402(f) shall be applied to the payor in lieu of the plan administrator.

ANALYSIS

Under the facts presented, the retirement plan assets of Decedent's Plans are payable
to Decedent's estate under the Decedent's beneficiary designations for Decedent's
Plans. Under the terms of Decedent's Last Will and Testament, Taxpayer, Decedent's
surviving spouse, is the sole personal representative and sole beneficiary of Decedent's
estate. As sole personal representative, Taxpayer can direct the retirement plan assets
of Decedent's Plans to be paid to Decedent's estate and then to Taxpayer as the
estate's sole beneficiary. Under these circumstances, because the distributions of the
retirement plan assets will be paid to Decedent's spouse, section 402(c) applies to the
distributions in the same manner as if the spouse were the Decedent. Therefore, the
distributions may be treated as being paid from Decedent's Plans to Taxpayer for
purposes of section 402(c). Thus, Taxpayer may roll over the retirement plan assets of
Decedent's Plans into one or more IRAs maintained in Taxpayer's name.

RULINGS

Thus, with respect to your ruling requests, we conclude as follows:

1. Taxpayer will be treated as the payee or distributee of the retirement plan assets
   from Decedent's Plans.

2. Taxpayer, as Decedent's spouse, will be eligible to roll over the retirement plan
   assets from Decedent's Plans into an IRA or IRAs maintained in Taxpayer's
   name, if the rollover occurs no later than the 60th day after the date the
   retirement plan assets are received by the Decedent's estate.

3. Taxpayer will not be required to include the above referenced distribution and
   rollover in Taxpayer's gross income for federal tax purposes in the year of such
   distribution and rollover

The rulings contained in this letter are based upon information and representations
submitted by Taxpayer, and on Taxpayer's behalf by Taxpayer's authorized
representative, and accompanied by a penalty of perjury statement executed by
Taxpayer, as specified in Rev. Proc. 2025-1, 2025-1 I.R.B. 1, section 7.01(16)(b). While
this office has not verified any of the material submitted in support of the request for
PLR-120336-24 5

rulings, it is subject to verification on examination. The Associate office will revoke or
modify a letter ruling and apply the 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 ruling was based, or, in the
case of a transaction involving a continuing action or series of actions, the controlling
facts materially change during the course of the transaction. See Rev. Proc. 2025-1,
section 11.05.

Except as expressly provided above, no opinion is expressed or implied concerning the
federal income tax consequences of any other aspects of any transaction or item of
income described in this letter ruling.

This letter 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,



                                            Amy S. Moskowitz
                                            Senior Technician Reviewer
                                            Qualified Plans Branch 3
                                            Office of the Associate Chief Counsel
                                            (Employee Benefits, Exempt Organizations, and
                                            Employment Taxes)

cc: ---------------------------
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