Summary

In PLR 201208039, the Service ruled neither a decedent's estate nor a testamentary trust were a "designated beneficiary" of her IRA, but that the division of the trust into separate trusts for four individual beneficiaries would not be treated as a taxable distribution.

Extended Summary

The decedent already passed her required beginning date at the time of her death. The decedent's probate estate was the named beneficiary of her IRA. The residue of the decedent's estate was distributable to a trust for her four children. The children proposed to divide the IRA into four inherited IRAs, to be funded by trustee-to-trustee transfers.

The Service determined that because the IRA designated the estate as beneficiary and an estate cannot be a designated benficiary, minimum required distributions would be measured with reference to the decedent's life expectancy immediately before death ("reduced by one for each subsequent calendar year"), rather than with reference to the life expectancies of each of the four children.

The Service, however, also ruled the proposed trustee-to-trustee transfer would not be treated as a taxable distribution or as an attempted rollover.

CPC Commentary

This poor result could have been averted had the decedent designated the residuary trust itself, rather than her probate estate, as the beneficiary of her IRA.

Relevant Documents

	201208039: Required Distributions	2/24/12
	Section 408: Individual retirement accounts	3/24/10
	Section 401: Qualified pension, profit-sharing, and stock bonus plans	3/24/10
	Reg. Sec. 1.401(a)(9)-5: Required minimum distributions from defined contribution plans.	9/16/12