IRS Ruling on Post-Death Plan-to-IRA Rollover


August 21, 2012 – The IRS has issued Private Letter Ruling (PLR) 201233022 enabling the personal representative of a deceased plan participant to complete a rollover from a qualified retirement plan to an IRA.

In this PLR case, the deceased plan participant’s intention to execute a direct rollover to an IRA upon her retirement was not fulfilled. When the participant died prior to the direct rollover taking place, her employer did not execute the transaction. The personal representative of the deceased’s estate succeeded in having the plan complete the transaction, but the receiving financial institution’s error in providing an IRA account number resulted in the deposit being made to a non-IRA account. With a statement from the institution accepting responsibility for the error, the IRS granted the personal representative the option to transfer the deceased’s former plan assets from the non-IRA account to a “rollover IRA.”

Because the financial organization had closed the IRA established by the deceased following its error of placing the assets into the wrong account, however, no IRA actually existed on the participant’s date of death. The IRS stated that the authority of the personal representative is a matter of state law, and ruled that the personal representative could establish an IRA to receive the assets if the applicable state’s laws grant such authority. It also ruled, however, that the representative could not name a designated beneficiary for purposes of the required minimum distribution (RMD) rules because the regulations apply to those who are beneficiaries at the time of death (Regulation Section 1.401(a)(9)-4, Q&A 4).

The IRS’ PLRs may only be relied upon by the individual(s) requesting the ruling.

PLR 201233022 may be accessed as follows.


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