Internal Revenue Service Department of the Treasury Wa shington, DC 20224 Number: 201821008 Release Date: 5/25/2018 Index Number: 402.00-00, 402.01-00, 402.08-05 -------------------------------- ------------------------- ---------------------------------- In Re: --------------------------- Third Party Communication: None Date of Communication: Not Applicable Person To Contact: ------------------- , ID No. ------------------ Telephone Number: ---------------------- Refer Reply To: CC:TEGE:EB:QP3 PLR - 127040-17 Date: February 22, 2018 Legend Decedent = --------------------------- Plan = ----------------------------------------------------------------- State = -------------- Amount A = ------------------ IRA X = ----------------------------------------------------------------------------------------------- --------------------------------------------- Taxpayer = --------------------------- Dear ------------------ : This letter responds to your authorized representative’s letter dated September 5, 2017, requesting a ruling concerni ng your ability to roll over a distribution of your deceased spouse’s account in the Plan into your individual retirement account, even though the distribution was first paid to his estate. The following facts and representations have been submitted under penalties of perjury in support of your request: Decedent was a participant in the Plan, and died before reaching age 70-1/2. You have submitted a letter from the Plan stating that the Plan was established by State under § 457(b) of the Internal Revenue Code. Because Decedent did not designate a beneficiary under the Plan, Decedent’s estate was the beneficiary of his account. Following Decedent’s death, the

PLR - 127040-17 2 Plan distributed Decedent’s account to his estate in a lump sum. The distribution from the Plan totaled Amount A, from which the Plan withheld federal and state taxes before paying the remainder to Decedent’s estate. Taxpayer is Decedent’s surviving spouse and is the executor and sole beneficiary of his estate. As executor, she promptly distribut ed the net amount the estate received from the Plan to herself as sole beneficiary. Taxpayer then deposited this amount, plus an amount equal to the taxes that were withheld by the Plan, into IRA X, an individual retirement account established in her name . The amount deposited into IRA X equaled Amount A, which was deposited within 60 days of the date Amount A was distributed from the Plan. You request the following rulings: 1. Taxpayer, the surviving spouse of Decedent, will be treated as having acquire d the distribution from the Plan directly from Decedent, and not from Decedent’s estate. 2. Taxpayer was eligible to roll over the distribution from the Plan to IRA X, which was established and maintained in her own name, pursuant to § 402(c)(9). 3. Taxpayer will not be required to include Amount A in her gross income for federal income tax purposes for the calendar year in which the distribution and rollover occurred. Section 457(b) defines an eligible deferred compensation plan as a plan established and ma intained by an eligible employer that meets the requirements specified in such section. Section 457(e)(1)(A) defines the term “eligible employer” as (A) a state, political subdivision of a state, and any agency or instrumentality of a state or political s ubdivision of a state, and (B) any other organization (other than a governmental unit) exempt from tax under this subtitle. Section 457(e)(16)(A) provides that in the case of an eligible deferred compensation plan established and maintained by an employ er described in subsection (e)(1)(A), if any portion of the balance to the credit of an employee in such plan is paid to such employee in an eligible rollover distribution (within the meaning of § 402(c)(4)), the employee transfers any portion of the prope rty such employee receives in such distribution to an eligible retirement plan described in § 402(c)(8)(B), and in the case of a distribution of property other than money, the amount so transferred consists of the property distributed, then such distributi on (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid. Section 457(e)(16)(B) provides that the rules of paragraphs (2) through (7), (9), and (11) of § 402(c) and § 402(f) shall apply for purposes of s ubparagraph (A). Section 402(c)(2) provides that the maximum amount of an eligible rollover distribution shall not exceed the portion of such distribution which is otherwise includible in gross income,

PLR - 127040-17 3 provided that such limitation does not apply to (1 ) amounts transferred in a direct trustee-to - trustee transfer to a qualified trust or an annuity contract described in § 403(b) that meets certain conditions; or (2) amounts transferred to an eligible retirement plan described in clause (i) or (ii) of § 40 2(c)(8)(B) . Section 402(c)(3) provides that the exclusion from gross income shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed. Section 402(c)(4) defines “eligible rollover distribution” as any distribution to an employee of all or a portion of the balance to the credit of an employee in a qualified trust; except that the terms shall not include - (A) any distribution which is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancies or the joint life expectancies) of the employee and the employee’s designated beneficiary, or for a period of 10 years or more, and (B) any distribution to the extent the distribution is required under § 401(a)(9); and (C) any distribution which is made upon hardship of the employee. Section 402(c)(8)(B) defines eligible retirement plan as (i) an individual retirement account described in § 408(a), (ii) an indivi dual retirement annuity described in § 408(a), (ii) an individual retirement annuity described in § 408(b) (other than an endowment contract), (iii) a § 401(a) qualified retirement plan, (iv) an annuity plan described in § 403(a), (v) an eligible deferred compensation plan described in § 457(b) which is maintained by an eligible employer described in § 457(e)(1)(A), and (vi) an annuity contract described in § 403(b). Section 402(c)(9) provides that if a distribution attributable to an employee is paid to the spouse of the employee after the employee’s death, § 402(c) will apply to such distribution in the same manner as if the spouse were the employee. In this case, Decedent’s estate is the beneficiary of his account in the Plan, and his account was paid by the Plan to the estate in a lump sum (net of taxes withheld on the distribution). Taxpayer, Decedent’s surviving spouse, is the executor and sole beneficiary of Decedent’s estate, and promptly distributed the amount received from the Plan to herself. Taxpayer then deposited the amount distributed from the Plan (including both the net amount the estate received from the Plan and an amount equal to the taxes withheld on such distribution) into IRA X within 60 days of the date such amount was distributed fr om the Plan. Under these circumstances, Decedent’s account under the Plan may be treated as paid from the Plan to Decedent’s spouse for purposes of § 402(c). Accordingly, we conclude that:

PLR - 127040-17 4 1. Taxpayer may be treated as having received the distribution of Amount A from the Plan for purposes of § 402(c); 2. Taxpayer A was eligible to roll over Amount A to IRA X, which was established and maintained in her own name; and 3. Taxpayer will not be required to include Amount A in her gross income for federal income tax purposes for the calendar year in which the distribution and rollover occurred. The rulings contained in this letter are based upon information and representations submitted by the taxpayer a nd accompanied by a penalty of perjury statement executed by an appropriate party, as specified in Rev. Proc. 2018-1, 2018-1 I.R.B. 1, § 7.01(16)(b). This office has not verified any of the material submitted in support of the request for ruling, and such material is subject to verification on examination. The Associate office will revoke or modify a letter ruling and apply the revocation retroactively if there has been a misstatement or omission of controlling facts; the facts at the time of the transact ion are materially different from the controlling facts on which the ruling was based; or, in the case of a transaction involving a continuing action or series of actions, the controlling facts change during the course of the transaction. See Rev. Proc. 2 018-1, § 11.05. This letter ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent. In accordance with the Power of Attorney on file with this office, a copy of th is letter is being sent to your authorized representative. A copy of this letter must be attached to any income tax return to which it is relevant. Alternatively, taxpayers filing their returns electronically may satisfy this requirement by attaching a st atement to their return that provides the date and control number of the letter ruling. Sincerely, John T. Ricotta Chief, Qualified Plans Branch 3 Office of Associate Chief Counsel (Tax Exempt and Government Entities) cc: