Defective Selection of Beneficiary of an IRA - Letter Ruling 200846028 dated August 20, 2008

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
• Pages: 164-165

164

LETTER RULING

200846028

(AUGUST 20, 2008)

(Selected portions of the ruling are provided below)

This ruling involves the selection of a beneficiary of an IRA that does not

satisfy the IRS for purposes of determining the life expectancy payout

period in order to determine postdeath required minimum distribution

from an inherited IRA account.

According to the facts, on Date 3, 1997, Taxpayer A executed both

his Last Will and Testament and Trust T. Also dated the same date is an

IRA X Account Application executed by Taxpayer A. Under Section 7

of that Application, entitled “IRA Beneficiary Designation,” Taxpayer A

designated as his primary beneficiary the following: “as stated in wills.”

No contingent or other beneficiaries are listed on the form.

With respect to your ruling requests, Taxpayer B seeks a ruling that

the language “as stated in wills” in the IRA beneficiary designation form

should be treated as a designation of Trust T as the beneficiary of IRA X

and the beneficiaries of the residual assets under Trust T should be treated

as the “designated beneficiaries” for purposes of Section 401(a)(9).

Taxpayer B argues that the language “as stated in wills” should

be read as a designation of Trust T as beneficiary and, under Section

1.401(a)(9)- 4, Q & A- 5, that the beneficiaries of Trust T are “designated

beneficiaries” for purposes of Section 401(a)(9). However, we believe

this argument fails under the facts of this case. The beneficiary desig-

nation form makes no mention of Trust T. Thus, we do not believe that

Trust T can be said to be “named as a beneficiary of the employee” as

required by Section 1.401(a)(9)- 4, Q & A- 5.

As IRA X had no designated beneficiary at Taxpayer A’s death on

Date 2, 2004, Taxpayer A’s estate was the beneficiary of Taxpayer A’s IRA

X at the time of his death. Except for certain exceptions not applicable

here, Section 1.401(a)(9)- 4, Q & A- 3 of the Regulations provides that