In this case the primary beneficiary of an IRA and a Roth IRA passed away before the testator. As a consequence the accounts had to go through the estate. As the sole beneficiary of the estate, the IRA and Roth IRA went to the deceased’s spouse.
The spouse elected to roll over the IRA and Roth IRA into her own IRA. The IRS determined that she could do that. However, she was only allowed to do so because of the particular facts of this case and some language in the preamble of the regulations, not the body of the regulations.
This is important because the ruling seems to indicate that in other situations the result would not be as favorable. To guard against such outcomes it is important to designate a contingent beneficiary on your IRA. That is someone to whom it will pass if the primary beneficiary has already passed away.
