“In PLR 202624001, a decedent named no beneficiary for his traditional IRA, with the usual result—his “estate” was the default beneficiary under the IRA agreement. The IRS confirmed that there was therefore “no designated beneficiary”; that the deceased IRA owner’s estate could directly transfer the inherited IRA, in three equal shares, into three inherited IRAs for the three residuary beneficiaries of the estate; and that the beneficiaries would then be required to take distributions from these inherited IRAs over what would have been the remaining life expectancy of the deceased IRA owner. The ruling (which simply confirms the established practice for this situation) reminds us of the need for action by account owners and their advisors to avoid the situation; and of how very desirable it would be for Treasury to issue an actual Revenue Ruling or other authoritative pronouncement to end the needless requests by nervous trustees and intransigent IRA providers for letter rulings to confirm the validity of these transfers.”

Natalie Choate provides members with her analysis of PLR 202624001.

Natalie B. Choate, JD, is a nonpracticing lawyer in Wellesley, Massachusetts. Her current business is explaining the tax treatment of retirement benefits to other estate planning professionals. A frequent lecturer, and contributor to Leimberg Newsletters and other publications, she is the author of the estate planner’s “bible” on estate and distribution planning for our clients’ IRAs and other retirement plans, Life and Death Planning for Retirement Benefits (8^th ed. 2019). The book is available in printed form at www.ataxplan.com, or in an electronic edition via subscription at www.retirementbenefitsplanning.us.

Here is her commentary:

EXECUTIVE SUMMARY:

In PLR 202624001, a decedent named no beneficiary for his traditional IRA, with the usual result—his “estate” was the default beneficiary under the IRA agreement. The IRS confirmed that there was therefore “no designated beneficiary”; that the deceased IRA owner’s estate could directly transfer the inherited IRA, in three equal shares, into three inherited IRAs for the three residuary beneficiaries of the estate; and that the beneficiaries would then be required to take distributions from these inherited IRAs over what would have been the remaining life expectancy of the deceased IRA owner. The ruling (which simply confirms, again, the established practice for this situation) reminds us of the need for action by account owners and their advisors to avoid the situation; and of how very desirable it would be for Treasury to issue an actual Revenue Ruling or other authoritative pronouncement to end the needless requests by nervous trustees and intransigent IRA providers for letter rulings to confirm the validity of these transfers.

COMMENT:

Citations: Citations beginning with “§” indicated a section of the Internal Revenue Code of 1986 as amended through May 31, 2026. Citations beginning with “Reg. §” indicate a Treasury Regulation.

1.      The ruling’s facts present an all-too-common situation: Decedent had no beneficiary designation for his IRA, so the account passed to his estate as default beneficiary.

The ruling states these facts: Decedent died on Date 2, survived by three children, Taxpayers A, B, and C. Decedent owned a traditional individual retirement arrangement (“IRA X”). Decedent had attained the applicable age to begin required minimum distributions (RMDs) from IRA X. “The custodian for IRA X maintains there is no record of a beneficiary designation for IRA X. Therefore, Decedent’s estate is treated as the sole beneficiary of IRA X.” Decedent had left a valid will, leaving Decedent’s estate equally to the three children. Child A, as the executor under the will, sought rulings confirming:

·                As the beneficiaries of Decedent’s interest in IRA X, each Beneficiary’s respective interest in IRA X may be segregated and held in separate IRAs for purposes of determining each Beneficiary’s required minimum distributions under § 401(a)(9).

·                The Beneficiaries’ Inherited IRAs, being titled in Decedent’s name for the benefit of each Beneficiary, funded by means of trustee‑to‑trustee transfers from IRA X, constitute inherited IRAs under § 408(d)(3). [Note: See § 408(d)(3)(C)(ii) for definition of inherited IRA.]

·                The Beneficiaries may each receive distributions required under § 401(a)(9) from each Beneficiary’s specific inherited IRA (set up in Decedent’s name for the benefit of that Beneficiary, as a beneficiary of Decedent’s estate) over Decedent’s remaining life expectancy.

·                The transfer of each Beneficiary’s respective interest in the estate’s interest in IRA X to the Beneficiaries’ Inherited IRAs will not constitute a taxable distribution within the meaning of § 408(d)(1) to each Beneficiary and does not constitute a rollover as the term is used in § 408(d)(3). [Note: This last ruling is sought because rollovers are not permitted for inherited IRAs except for the surviving spouse.]

2.      IRS ruling provides all rulings requested by the estate.

The Treasury provided all the requested rulings. Since the decedent had not named a beneficiary and therefore the estate was the (default) beneficiary of the IRA, there was no doubt that the decedent had “no designated beneficiary.” A designated beneficiary is defined as an “individual” named as beneficiary (§ 401(a)(9)(E)(i)) and the decedent’s “estate” is not an individual (Reg. § 1.401(a)(9)-4(b)).

The point sought in the ruling was confirmation of the validity of transferring the inherited IRA out of the decedent’s estate directly into separate “inherited IRAs” in the names of the individual beneficiaries via IRA-to-IRA transfers. This would not change the applicable RMD rules—the transfer did not transform the children/heirs into “designated beneficiaries.” The ruling simply sought confirmation to allow these transfers so the children could close the estate, divide their inheritance, and pursue their future plans with separate investment and drawdown policies.

3.      Why did the beneficiaries need a ruling for this?

In granting all the requested rulings, PLR  202624001 cites Revenue Ruling 78‑406, 1978‑2 C.B. 157, in support of the conclusion that a direct transfer from one IRA to another “does not constitute a payment or distribution to a participant, payee or distribute, as those terms are used in § 408(d). Furthermore, such a transfer does not constitute a rollover distribution.”

Well, if there is already a Revenue Ruling confirming this conclusion, why the heck did A, B, and C feel they needed to get their own PLR to reconfirm it? Perhaps because the IRA provider demanded it as a condition of allowing the transfer....But why would the IRA provider demand ANOTHER ruling if there already is a legal-authority ruling (Rev. Rul. 78-406) on point? Because Rev. Rul. 78-406 did not involve an INHERITED IRA. It involved a transfer from the original living IRA owner’s IRA to another IRA also owned by such original living IRA owner. It did not involve a transfer from an inherited IRA held in the name of the estate to inherited IRAs in the names of the estate beneficiaries.

In the Revenue Ruling, the taxpayer (call him “John Doe”) was transferring funds from one IRA in the name of “John Doe” to another IRA still in the exact same name “John Doe” but at a different financial institution.

When money is to be transferred from an IRA originally in the name of “John Doe,” and now in the name of “Estate of John Doe, as beneficiary of John Doe,” and the customer wants to transfer it into three IRAs in the names of the three beneficiaries of the Estate of John Doe—the transaction doesn’t look exactly the same as the Rev. Rul. 78-406 situation. Even though the inherited IRA is owned beneficially by exactly the same people after the transfer as before the transfer (i.e., the three residuary beneficiaries of John Doe’s estate), it just doesn’t look like the simple single IRA-to-IRA, with both-accounts-titled-exactly-the-same, transfer blessed in Rev. Rul. 78-406.

There is no statute, regulation, or Revenue Ruling explicitly affirming that an inherited retirement account can be transferred (just like the transfer of an individual’s IRA from one IRA to another owned by such individual) from one inherited IRA to another inherited IRA beneficially owned by the same person without triggering a “distribution” or “rollover.” All we have in terms of explicit IRS-issued support for the conclusion that, yes, these IRA-to-IRA transfers of inherited IRAs owned by the same beneficial owners are perfectly ok JUST LIKE the IRA-to-IRA transfers okayed in Rev. Rul. 78-406 is a sheaf of private letter rulings (see excerpt from Life and Death Planning for Retirement Benefits at the end of this article for the list)

Revenue Rulings are published in the Internal Revenue Bulletin and are citable as authority for tax questions. And letter rulings are not published in the Bulletin and are not citable.  § 6110(k)(3).

Or...are they?

4.      Why advisors, clients, and IRA providers can rely on the Rev. Rul. plus PLRs

Many major IRA providers are willing to process such transfers based on Rev. Rul. 78-406, the PLR “precedents,” and/or a legal opinion. However, some are not, and continue to require the beneficiary(ies) to obtain an IRS ruling before allowing the transfer.

Does this mean that all beneficiaries stuck with these IRAs-payable-to-participant’s-estate (or trust) are of necessity stuck with applying for their own letter rulings to legally effect the transfer from estate or trust to individual beneficiary? Consider the cost (in legal fees) of obtaining such a ruling and the delay involved (PLR 202624001 was issued at least 14 months after it was requested)!

Some beneficiaries can cure the situation by having the IRA transferred (still in the name of the estate or trust) to a more cooperative IRA provider. Others (such as those in PLR 202624001) for whatever reason seek a letter ruling. But this is NOT necessary.

Even the most persnickety IRA provider or executor does NOT need to get yet another ruling on this subject. The Supreme Court has held that the IRS is bound by a position it has taken consistently in numerous PLRs, unless and until it publically (and prospectively only) changes that position. Hanover Bank, 369 U.S. 672 (1962). See, e.g., Trimmer, 148 T.C. 14 (2017) in which the Tax Court, citing Hanover Bank, held that the taxpayer was entitled to receive from the IRS a hardship waiver of the 60-day rollover deadline, based on the IRS’s previously issued PLRs granting such waivers to other taxpayers similarly situated and not having announced any change in its policy.

Even though Rev. Rul. 78-406 did not deal explicitly with an inherited IRA, the IRS has cited that Revenue Ruling and its principal holding (an IRA-to-IRA transfer between IRAs of the same beneficial owner is not a “distribution”) as precedent numerous times, and consistently, in approving transfers from inherited IRAs in the name of an estate or trust to inherited IRAs in the names of the estate or trust beneficiary, just as it has done (again) in PLR 202624001. Under the holding in Hanover Bank, and absent a change in IRS policy, made with advance warning and applicable prospectively only, practitioners, fiduciaries, and IRA providers can rely on these PLRs as a correct application of Rev. Rul. 78-406, and do not need to seek a new PLR for each decedent’s heirs.

Conclusion: If you are an estate planning or tax advisor, make sure your clients have named beneficiaries for all of their retirement accounts, and check regularly to make sure the designations are still in effect and appropriate. If you are the IRS, please issue a Revenue Ruling explicitly confirming the validity of post-death IRA to IRA transfers so heirs and IRA providers do not have to rely on Private Letter Rulings and Rev. Rul. 78-406 which, though perfectly clear and on point, does not specifically refer to INHERITED IRAs.

Appendix: List of PLRs supporting IRA transfers from trust or estate to beneficiary(ies)

The following is an excerpt from Chapter 6 of the author’s book Life and Death Planning for Retirement Benefits (Ataxplan Publications; 8^th ed. 2019):

“PLR 2001-31033 (Rulings 5, 6, and 7) is typical. This ruling allowed the transfer of “IRA Y” from a terminating trust to the participant’s children, C and D. From the ruling: “The provision of Trust X which provides for its termination does not change either the identity of the individuals who will receive the IRA Y proceeds or the identity of the designated beneficiary of IRA Y.... Furthermore, the Trust X termination language which results in distributions from IRA Y being made directly to Taxpayers C and D instead of initially to Trust X and then to Taxpayers C and D was language in Trust X approved by [the participant] during his lifetime which reflects [the participant’s] intent to pay his children directly instead of through Trust X.”

“Other rulings approving the transfer of an inherited IRA from a trust to the individual trust beneficiaries (without requiring termination of the IRA or otherwise triggering immediate income tax) are: PLRs 2000-13041, 2001-09051; 2003-29048 (IRA payable to a trust divided into four “sub-IRAs,” each to be held by one of the individual trust beneficiaries); 2004-33019; 2004-44033–2004-44034; 2004-49040–2004-49042; 2007-40018; 2007-50019; 2008-03002; 2010-38019; 2012-10045; and 2012-10047.... Regarding transfer of an inherited IRA to charitable residuary beneficiaries, see 2005-26010, 2006-52028, and 2008-26028.      

“In PLR 2010-13033, an IRA was payable to an estate; the IRS permitted transfer of the IRA from the estate to the “pourover” trust that was beneficiary of the estate, and thence to the trust’s beneficiaries. ....”

HOPE THIS HELPS YOU HELP OTHERS MAKE A POSITIVE DIFFERENCE!

Natalie Choate

CITE AS: 

LISI Employee Benefits & Retirement Planning Newsletter #890 (June 22, 2026) at http://www.leimbergservices.com. Copyright 2026 Leimberg Information Services, Inc. (LISI). Reproduction in Any Form or Forwarding to Any Person Prohibited - Without Express Permission. Our agreement with you does not allow you to use or upload content from into any hardware, software, bot, or external application, including any use(s) for artificial intelligence technologies such as large language models, generative AI, machine learning or AI system. This newsletter is designed to provide accurate and authoritative information regarding the subject matter covered. It is provided with the understanding that LISI is not engaged in rendering legal, accounting, or other professional advice or services. If such advice is required, the services of a competent professional should be sought. Statements of fact or opinion are the responsibility of the authors and do not represent an opinion on the part of the officers or staff of LISI.