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IRA rolled over through trust not taxable.

* Generally, if both spouses are living, a husband cannot roll over his IRA into his wife's and vice versa. However, upon the death of the first spouse, the surviving spouse can roll over the decedent's IRA tax-free unless it passes through a trust.

In letter ruling 200011062, the IRS said a surviving spouse could roll over her husband's IRA even though she took the proceeds through a trust as long as the surviving spouse was the sole trustee and beneficiary of the trust and had the power to invade the trust corpus. Under the ruling, the surviving spouse is treated as having received the proceeds directly from the decedent (not from the trust), and the rollover is tax-free.

--Michael Lynch, CPA, Esq., professor of tax accounting at Bryant College, Smithfield, Rhode Island.
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Author:Lynch, Michael
Publication:Journal of Accountancy
Geographic Code:1USA
Date:Jun 1, 2000
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