Correction of Excess Contribution by Legal Representative of Estate of Deceased

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 32-36

32

CORRECTION OF

EXCESS CONTRIBUTION

BY LEGAL

REPRESENTATIVE OF

ESTATE OF DECEASED

IRS Letter Ruling 8145070, dated August 13, 1981, permits the admin-

istrator of the decedent’s estate to correct an excess contribution made

by the decedent during his lifetime to his IRA .

According to the fact s in the letter ruling, reprinted below, the ben-

eficiary of the decedent’s IRA was t he decedent’s estate.

The excess contribution to his IR A was made by the decedent dur-

ing his lifetime in 1980. In 1981 the correction involving the excess con-

tribution and earn ings thereon was timely made in 1981 prior to the due

date of the decedent’s 1980 federal income tax ret urn.

Both the excess contribution and the earnings thereon was timely

removed in 1981 from the decedent’s IRA prior to the due date of the

decedent’s 1980 federal income tax ret urn.

The IRS held that the timely removal of the excess contribution in

1981 was not subject to federal income taxation. However, the earni ng

on the excess contribution ti mely removed in 1981 was taxable in 1980

under the excess contribution correction rules.

Author’s Note

In this case the decedent’s IRA was payable to his estate. Had the dece-

dent’s IRA been payable to a named beneficiary, then it may not be possi-

ble to correct an excess contribution made by an individual during his/her

lifetime in t he absence of guidance from t he Internal Revenue Service.

goL88517_01_c01_p001-166.indd 32goL88517_01_c01_p001-166.indd 32 3/12/13 8:27 AM3/12/13 8:27 AM