A surviving spouse requested four rulings from the IRS to roll over the part of her son’s inherited IRA that was assigned to her by state court as community property, known as a spousal rollover IRA. The IRS, however, rejected these requests, concluding that the applicable part of the IRC applies without regard to community property laws. The IRS must ignore the state community property laws and follow federal tax law, neglecting the surviving spouse’s property interest. Further, any assignment of the son’s interest in the IRA would be regarded as a taxable distribution to the son.
See Dawn S. Markowitz, IRS Issues Harsh Ruling Against Surviving Spouse Seeking to Roll Over Part of Son’s Inherited IRA, Wealth Management, June 6, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
