IRA

When You're Happy to Still "Rollover" in Your Grave

January 30, 2014

It can sometimes be difficult to meet rigid Internal Revenue Code (IRC) rules.

It can sometimes be difficult to meet rigid Internal Revenue Code (IRC) rules. For example, the 60-day rollover requirement for avoiding taxation on a retirement plan distribution is especially cut-and-dried. The rule can only be met if the amount received by an individual attempting the rollover is repaid into an IRA (or another eligible retirement plan) for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution.

Well, life happens and Private Letter Ruling (PLR) 201334046 offers a good example. It addresses a situation in which an IRA owner died before he could complete a rollover (within 60 days) that he had initiated prior to his death. Without any relief, this would have resulted in the full inclusion of the distribution in the deceased owner’s last income tax return. Thankfully, the IRS instituted procedures to try to provide some relief for this sort of situation. Specifically, the IRS can waive the 60-day requirement where failure to waive would be against equity or good conscience, including events beyond the reasonable control of the individual subject to such a requirement (IRC Section 408(d)(3)(I)). For this determination, the IRS will consider all facts and circumstances including the inability to complete a rollover due to death (Revenue Procedure 2003-16).

In PLR 201334046, the surviving spouse could not be appointed as personal representative of her husband's estate in time to complete the rollover within 60 days. Due to the unfortunate timing of events in conjunction with this rollover, the IRS granted a 60-day extension from the date the PLR was issued to complete the rollover to an IRA, assuming all other requirements for a valid rollover were met. This effectively provided some deferral options for the IRA assets that would have otherwise been lost.

Here at Pacific Life Annuities, we have the resources and support that can help you and your clients evaluate rollover and deferral opportunities for the clients' retirement accounts as well as the beneficiaries on these accounts. For more ideas and information as you manage your clients' retirement assets and rollover opportunities, Retirement Strategies Group at (800)722-2333, ext. 3939, or e-mail us at RSG@PacificLife.com.

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Pacific Life offers a broad and diversified range of products and solutions designed to help individuals and families achieve asset growth, sustainable retirement income, and long-term financial independence. We also help businesses manage and fulfill their long-term retirement plan commitments to employees.

Pacific Life, its distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor or attorney.

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Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. 

Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA) and an affiliate of Pacific Life & Annuity Company. Variable and fixed annuity products are available through licensed third parties.

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