Violations of the Rollover Rules by Non-Spouse Beneficiary When an Inherited IRA Is Involved

AuthorSeymour Goldberg
ProfessionSenior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
Pages37-38
37
VIOLATIONS OF THE
ROLLOVER RULES
BY NON-SPOUSE
BENEFICIARY WHEN
AN INHERITED IRA IS
INVOLVED
The Internal Revenue Code does not permit a non-spouse indiv idual
beneficiary to receive the proceeds of an inherited IRA and then estab-
lish an inherited IR A with such proceeds. I n addition, the non-spouse
individual beneficiary of an inherited IRA may not receive the proceeds
of the inherited IR A and roll over the proceeds to an IRA mai ntained i n
the name of the non-spouse beneficiar y.
See Beech v. Commissioner, T.C. Summary Opinion 2012-74. Please
note that pursuant to IRC §7463(b), the opinion may not be treated as
precedent for any other case.
In Beech, the petitioner (daughter) received two dist ributions from
her deceased mother’s IRA because she was the beneficiary of her
mother’s IRA. One distr ibution check, dated May 21, 2008, amounted
to $2,828 and the other distribution, dated May 23, 2008, amounted to
$35,358. Both checks were made payable to the petitioner.
Petitioner deposited the $35,358 check with a mutual fund company
and established an in herited traditional IRA. The pet itioner reported as
taxable only the $2,828 distribution check and not the $35,358 distribu-
tion check.
Respondent (Commissioner) issued a deficiency notice and deter-
mined that the additional $35,358 distribution was taxable income on
the petitioner’s 2008 joint retur n.
goL88517_01_c01_p001-166.indd 37goL88517_01_c01_p001-166.indd 37 3/12/13 8:27 AM3/12/13 8:27 AM

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