IRS Private Letter Rulings Concerning IRAs

An IRS private letter rulings (PLRs) is a statement by the IRS given to a taxpayer who submitted a request to the IRS for it’s position with respect to one or more federal tax issues set forth in the PLR.  The PLR process is a way for a taxpayer to determine in advance of taking action if the proposed action will cause a problem with the IRS.  PLRs annot be relied on by any person except the person who applied for and obtained the PLR.  Although PLRs do not have any precedential value, they are instructive because they do indicate IRS thinking with respect to the issues addressed in the PLR.

Note: As we discuss IRS Private Letter Rulings we are not giving any tax or legal advice. 

IRS Private Letter Rulings have little precedential value. The statements made by the IRS in Private Letter Rulings can be relied on only by the taxpayer(s) who requested the Private Letter Ruling.  The IRS Private Letter Rulings listed below are for informational purposes and to inform you as to positions and statements made by the IRS with respect to IRA investments and transactions.

IRS Private Letter Rulings 200732026 and 200732027:  The IRS said that shares of exchange-traded funds (ETFs) that acquired gold and/or silver did not constitute a collectible if the metals were acquired in an IRA.  The ruling found that money invested in shares of gold and silver ETFs within an IRA was not a distribution subject to an early withdrawal penalty.

IRS Private Letter Ruling 200705032: Allocation of IRAs to a trust after an IRA owner died were not treated as an inherited IRA to decedent’s spouse. The rollover of the entire amount into the spouse’s IRAs were allowed if accomplished within sixty days and the funds attributable to the decedent’s IRAs were not included in the spouse’s or the trust’s gross income.  The spouse and the trust were not required to withdraw any required minimum distributions with respect to any calendar years before the rollover.

IRS Private Letter Ruling 200652028:  The assignment of a decedent’s IRAs to two charities in satisfaction of their share of the residue of a Trust created by the decedent was not a transfer under Internal Revenue Code Section 691(a)(2).

IRS Private Letter Ruling 200650023:  After her husband’s death a surviving spouse was allowed to rollover her deceased husband’s profit sharing plan and SEP-IRAs account balances to an IRA in decedent’s name from which she could receive penalty-free distributions before age 59 and a half in accordance with Internal Revenue Code Section 72(t)(2)(A)(ii).

IRS Private Letter Ruling 200217059, January 31, 2002: The transfer of possession of bullion coins and bars from the IRA custodian to a non-bank entity that provides precious metals safekeeping services would cause the bullion to become collectibles under Internal Revenue Code Section 408(m)(3) because the IRA custodian would not possess the coins and bullion.  Therefore, an IRA that deposits bullion coins and bars with a non-bank entity must  treat the deposit as a distribution from the IRA to its owner.

IRS Letter Ruling 200008044, December 3, 1999: Dividing an inherited IRA into four separate trusts was not a distribution.

IRS Letter Ruling 200027061, April 12, 2000: IRA funds acquired from the estate of a deceased spouse can be rolled over tax free into the survivor’s IRA.

IRS Letter Ruling 199929029, April 27, 1999: IRA’s investment in an entity taxed as a Subchapter S corporation will terminate the entity’s S corporation tax method.

IRS Revenue Ruling 2000-2:  An executor may elect under Internal Revenue Code Section 2056(b)(7) to treat an IRA and a trust as qualified terminable interest property (QTIP) when the trustee of the trust is the named beneficiary of the decedent’s IRA. The surviving spouse may  compel the trustee to withdraw from the IRA all the income earned by the IRA assets at least annually and to distribute that amount to the spouse, and no person has a power to appoint any part of the trust property to any person other than the spouse.

IRS Revenue Ruling 2008-5:  If a taxpayer sells stock for a loss and causes the taxpayer’s IRA or Roth IRA to purchase substantially identical stock or securities within thirty days before or after the sale, the taxpayer’s loss on the sale of the stock will be disallowed because it was a wash sale.