3712 / Is the value of an IRA includable in the decedent's gross estate?

The value of an IRA account is not discounted for income tax payable by beneficiaries or for lack of marketability. An income tax deduction may be available for federal estate tax attributable to the IRA.²

The value of an annuity or other payment receivable under an individual retirement plan or arrangement by the beneficiary of a deceased individual is includable in the decedent’s gross estate under the rules discussed in Q 620 to Q 629. In reading those rules, be aware that any contribution for the purchase of an annuity made by the decedent’s employer or former employer, as under an SEP ( Q 3701), is considered to be contributed by the decedent if made by reason of his or her employment.³

For estates of decedents dying after 1984, the Tax Reform Act of 1984 generally repealed the previously existing estate tax exclusion; special rules may apply for decedents dying after 1984 who separated from service before January 1, 1985. Qualified plan benefits rolled over to an IRA after 1984 are treated as subject to the transitional rules for IRAs rather than those for qualified plans ( Q 3993).⁴