IRS written determination 201430021

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
MAY 0 1 2014
Uniform Issue List: 408.08-00, 4973.02-00
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Legend:
Decedent
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Trust
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Child A
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Child B
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Trustee
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Investment Advisor
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Broker -Dealer
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Custodian
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IRA X
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Annuity A
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Annuity 8
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Annuity C
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Annuity D
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201430021

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201430021
State
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IRAY
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Amount A
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Amount B
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Amount C
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Amount D
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Date 1
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Date 2
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Date 3
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Date 4
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Dear·
This is in response to your request dated August 31, 2011, and supplemented on
December 7, 2012, April4, 2013, August 12, 2013, August 14, 2013, and August 26,
2013, submitted by your authorized representative
on your behalf, in which you request
a
letter ruling under sections 408(d) and 4973 of the Internal Revenue Code (the
"Code").
The following facts and representations have been submitted under penalties perjury
in
support of the rulings requested.
Decedent was the owner
of IRA X, which contained as investments Annuity A, Annuity
B, Annuity C, and Annuity D. Prior to her death, Decedent established the Trust on
Date 1. Decedent then died on Date 2. The Trust was the named beneficiary of
Annuities A, B, C, and D.
The beneficiaries of the Trust after Decedent's death are Decedent's children, Child A
and Child
B. Upon Decedent's death, Trustee, a financial institution, became the
trustee
of the Trust. The Trust is administered under the laws of State. Investment
Advisor as an employee
of Broker-Dealer, was appointed as the investment advisor to
the Trust. Broker-Dealer
is a broker-dealer firm.

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201430021'
After Decedent's death, Investment Advisor intended to transfer the death benefits of
Annuities A, B, C, and D via a trustee-to-trustee transfer to IRA Y, an IRA set up for the
Trust with Broker-Dealer that is
held by Custodian, a financial institution. Investment
Advisor's assistant filled out death benefit claims forms for Annuities
A, B, C, and D, and
on Date 3, Trustee signed the claims forms. However, instead of requesting a trustee-
to-trustee transfer, the forms requested that the checks be
payable to the Trust and sent
to Broker-Dealer.
In the month of Date 4, Amounts A, B, C, and D were sent by check payable to the
Trust from Annuities A,
B, C, and D, respectively, and mailed to Broker-Dealer who
gave the checks to Custodian to deposit into
IRA Y. You have represented that IRA Y
meets the requirements
of Section 408 of the Code to be an IRA. Neither the Trustee
nor the
Investment Advisor received the checks; instead they
were transferred by
Broker-Dealer directly to Custodian for deposit
in IRA Y.
Based on the facts and representations, you request the following rulings:
(1) that Amounts
A, B, C, and D were properly transferred to IRA Y in the month of
Date 4;
(2) that no amount was paid or distributed out of the IRA X under section 408 of the
Code as a result
of the transfers of Amounts A, B, C, and D to IRA Y;
(3) that no amount is includable in gross income by the Trust as a result of the
transfers
of Amounts A, B, C, and D; and
(4) that Amounts
A, B, C, and D placed in IRA Yin the month of Date 4 do not
represent excess contributions subject to penalty under section 4973
of the
Code.
With respect to your first, second, and third ruling requests, Section 408(d)(1)
of the
Code provides that, except as otherwise provided
in section 408(d), any amount paid or
distributed out
of an IRA shall be included in gross income by the payee or distributee,
as the case may be,
in the manner provided under section 72 of the Code.
Revenue Ruling 78-406, 1978-2
G.B. 157, provides that the direct transfer of funds from
one
IRA trustee to another IRA trustee, even if at the behest of the IRA holder, does not
constitute a payment or distribution to a participant, payee, or distributee as those terms
are used
in section 408(d) of the Code and does not constitute a rollover contribution
because such funds were not within the direct
control and use
of the participant.
Accordingly, such a transfer does not
result
in a payment or distribution that is includible
in the gross income of the participant.
The information presented and documentation submitted by Taxpayer indicates that the
Taxpayer intended to make a trustee-to-trustee transfer to IRA Y and that Amounts
A,
B, C, and D were actually transferred from Annuities A, B, C, and D to Custodian (via

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201430021
Broker-Dealer) and were not paid or distributed to Taxpayer. In the absence of
payment or distribution, the transfer is not a rollover contribution because the funds
were never within the direct control and use
of the Trust, Trustee, or Investment
Advisor.
With respect to your fourth
ruling request, Section 4973
of the Code imposes an excise
tax equal to 6 percent
of the amount of any excess contribution to an IRA. This 6
percent tax applies for each taxable year of the IRA owner during which such excess
contributions remain
in such IRA, determined as of the end of the taxable year. An
excess contribution under section 4973
is defined as a contribution in excess of the
maximum amount that may be contributed to an
IRA
Under the circumstances presented in this case, the Service hereby determines:
(1) that Amounts
A, B, C, and D were properly transferred to IRA Y in the month of
Date 4, pursuant to trustee-to-trustee transfers pursuant to Revenue Ruling 78-
406;
(2) that, as trustee-to-trustee transfers, no amounts were paid or distributed out
of
the IRA X under section 408 of the Code as a result of the transfers of Amounts
A, B, C, and D to IRA Y;
(3) that, accordingly, no amounts are includable in gross income by the Trust as a
result
of the transfers of Amounts A, B, C, and D to IRA Y; and
(4) that, since Amounts
A, B, C, and D were transferred to IRA Y via trustee-to-
trustee transfers, they do not represent contributions subject to
penalty for
excess contributions under section 4973
of the Code.
No opinion
is expressed as to the tax treatment of the transaction described herein
under the provisions of any other section
of either the Code or regulations which rriay be
applicable thereto.
This letter
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.
Pursuant to a power
of attorney on file with this office, a copy of this letter ruling is being
sent to your authorized representative.

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201430021
If you wish to inquire about this ruling, please contact * * * * * * * * * * * * (* * *) * * *-
* * * * Please address
all correspondence to SE:T:EP:RA:T2.
Enclosures:
Deleted copy
of ruling letter
Notice
of Intention to Disclose
cc: * * *