The Internal Revenue Service last week posted an unusual private letter ruling: one that lists "individual retirement annuities" as a subject.
The ruling, Private Letter Ruling 202519010, is the first about that topic posted since 2002 and only the fourth about the topic in the IRS private letter ruling database.
An unnamed taxpayer, Taxpayer B, wrote to the IRS to ask about an individual retirement annuity that had been owned by Taxpayer B's spouse, A. A's estate was the only beneficiary of the annuity.
In the reply, Neil Sandhu, an IRS official, blesses efforts by Taxpayer B to move the annuity assets into Taxpayer B's own individual retirement arrangement.
Unless Taxpayer B puts the assets in a Roth IRA or something goes wrong, "Taxpayer B will not be required to include in Taxpayer B's gross income any portion of the IRA X proceeds timely rolled over to an IRA set up and maintained in Taxpayer B's name," Sandhu writes.
For purposes of an Internal Revenue Code section that deals with taxes on inherited IRAs, A's IRA "will not be treated as an inherited IRA," Sandhu adds.
The ruling appears to be similar to private letter rulings the IRS has issued in connection with non-annuity individual retirement accounts passed from a husband or wife who has died to a surviving spouse.
Sandhu, for example, gave a similar answer in PLR 202210016 and in PLR 202031007.
What it means: The IRS seems to be confirming that it thinks the rules for passing an individual retirement annuity from a spouse who has died to the other spouse are the same as the rules for passing an individual retirement account that holds mutual funds or other non-annuity sets from a spouse who has died to the surviving spouse.
Private letter rulings: The IRS uses private letter rulings to answer taxpayers' questions about some types of concerns.
The rulings apply only to the taxpayers who ask for the letters, but tax experts assume that the letters show how the IRS sees a topic.
In some cases, the IRS may provide dozens of nearly identical private letter rulings to taxpayers who ask similar questions.
Taxpayer B's situation: Taxpayer B's representative wrote to the IRS Aug. 2, 2024, and gave the IRS an update Jan. 3, 2025.
Taxpayer B and A, the spouse who died, had two children. Neither spouse had other children.
Taxpayer A, who died without a will, named Taxpayer B as the only beneficiary of the individual retirement annuity.
A state probate court made Taxpayer B the only administrator of the deceased spouse's estate.
Taxpayer B's state treated Taxpayer B as the only beneficiary of the estate, because all of A's surviving children were also Taxpayer B's children, and Taxpayer B had no other descendants.
Taxpayer B wants to have the annuity issuer pay out a lump sum to A's estate. Taxpayer B then intends to move the cash into Taxpayer B's own individual retirement arrangement within 60 days after the proceeds are received by A's estate.
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