See-through trust may split inherited IRA without current tax

Plain-English summary

An inherited IRA was payable to an irrevocable trust for two child beneficiaries after the prior beneficiary died before 2020 and before his required beginning date. Timely trust amendments required every IRA distribution to pass immediately to the respective child, making later remainder beneficiaries only potential successors. The IRS ruled that the trust qualified as a see-through trust and that required minimum distributions must use the life expectancy of the older child. It also allowed the trustee to divide the IRA through direct trustee-to-trustee transfers into separately titled inherited IRAs for the two trusts without a taxable distribution or prohibited rollover.

Ruling snapshot

• Question: Are the children designated beneficiaries for minimum-distribution purposes, and may the inherited IRA be divided by direct transfers without current tax?
• Outcome: Approved. The older child's life expectancy controls, and the trustee-to-trustee division is nontaxable.
• Key authorities: IRC §§ 401(a)(9) and 408; Treas. Reg. §§ 1.401(a)(9)-4, -5, and -8; Rev. Rul. 78-406

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202114012 Third Party Communication: None
Release Date: 4/9/2021 Date of Communication: Not Applicable
Index Number: 401.00-00, 401.06-00,
401.06-02, 408.00-00, Person To Contact:
408.08-00 --------------------, ID No. --------------------
Telephone Number:
------------------------------------- -------------------
------------------------------------------------------- Refer Reply To:
----------------------------------------------------- CC:EEE:EB:QP1
--------------------------------------------------- PLR-116072-20
--------------------------------- Date:
January 14, 2021

Employee A = --------------------
Decedent B = ------------------------
Child C = -------------------
Child D = ----------------
State S = --------
Trust T = ------------------------------------------------------------------------------
Trust U = ---------------------------------------------------------------------------------------------
------------------------------------------------
Trust V = ---------------------------------------------------------------------------------------------
-------------------------------------------------
Trust W = ---------------------------------------------------------------------------------------------
------------------------------------------------
IRA X = ---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
IRA Y = ---------------------------------------------------------------------------------------------
IRA Z = ------------------------------------------------------------------------------------------
Date 1 = -----------------------
Date 2 = -------------------------
Date 3 = --------------------------
Date 4 = ---------------------------
Date 5 = -------------------
Date 6 = -------------------------
Date 7 = ----------------------
Date 8 = -----------------------
Date 9 = ------------------

Dear ----------------:
PLR-116072-20 2

This is in response to a request for a letter ruling under sections 401(a)(9) and 408 of
the Internal Revenue Code (Code), submitted on behalf of Trust W by its authorized
representative in correspondence dated June 15, 2020 and December 30, 2020.

The following facts and representations have been submitted under penalties of perjury
in support of the rulings requested.

On Date 1, Employee A established an individual retirement account (IRA) to receive
lump sum distributions from his employer’s retirement plans. On Date 2, Employee A
established Trust T. Employee A designated Trust T as beneficiary of Employee A’s
IRA. Employee A also executed a separate beneficiary designation. The designation
provided for the remaining balance of Employee A’s IRA following Employee A’s death
to be allocated among various subtrusts under Trust T, each for the benefit of one of
Employee A’s children and grandchildren. The designation also permitted the trustee of
each subtrust to elect to treat the subtrust’s respective share of Employee A’s IRA as a
separate IRA for purposes of the distribution requirements of section 408(a)(6) (then in
effect).

Employee A died on Date 3 (a date before January 1, 1984). On Date 4, the trustee of
Trust U, a subtrust under Trust T for the benefit of Decedent B (a grandchild of
Employee A), elected to treat its entire share of Employee A’s IRA as a separate IRA for
the benefit of Decedent B. Trust U received a private letter ruling, dated Date 5, that
concluded that the election met the election requirements under § 1.408-2(b)(7)(ii) of
the Income Tax Regulations.

Under § 1.408-2(b)(7)(ii), a regulation under section 408(a)(7) as in effect at that time, a
non-spouse beneficiary of an individual who died before January 1, 1984, was, in effect,
permitted to treat the IRA as the beneficiary’s own IRA for purposes of section 401(a)(9)
and, therefore, was permitted to elect to defer distributions from the beneficiary’s
inherited IRA until the beneficiary attained age 70½. Accordingly, Trust U’s election
resulted in treatment of Decedent B’s inherited IRA held by Trust U (IRA X) as
Decedent B’s own IRA for purposes of the distribution requirements under section
401(a)(9).

Trust T and all of its subtrusts (including Trust U, Trust V, and Trust W) are each subject
to, and valid under, the laws of State S. Under their terms, Trust T became irrevocable
upon Employee A’s death, and all of Trust T’s subtrusts were irrevocable upon
formation.

As a subtrust of Trust T, Trust U is subject to the provisions of both Trust T and Trust U.
Those provisions include various contingencies for appointing the successor
beneficiaries of Trust U and IRA X. Both Trust T and Trust U provided a limited power
to the Trust T’s trustee to appoint Trust U’s successor beneficiaries from among
Employee A’s descendants.

You represent that IRA X is the only asset of Trust U.
PLR-116072-20 3

On Date 6, the trustees of Trust U executed a beneficiary designation for Trust U and
IRA X. The designation provided that (i) annual required minimum distributions from
IRA X were to commence on April 1 after the calendar year in which Decedent B
attained 70½ years of age, and (ii) Trust U was the beneficiary of IRA X upon Decedent
B’s death.

On Date 7 (a date prior to Decedent B’s death), the trustee of Trust U executed a limited
power of appointment over Trust U, which you represent complied with the
requirements of Trust T and the laws of State S. The power provided that the
descendants of Decedent B’s sister would become beneficiaries (in equal shares) of
Trust U and IRA X upon Decedent B’s death, subject to several contingencies. The
power also provided that each successor beneficiary’s share would be transferred to a
new separate subtrust of Trust T in the name and for the benefit of each beneficiary.

Decedent B died on Date 8 (a date prior to January 1, 2020), before his “required
beginning date,” as that term is defined in section 401(a)(9)(C). Decedent B had not
exercised any of his powers under the terms of Trust U to appoint a successor
beneficiary. Trust U’s trustee’s execution of the limited power of appointment on Date 7
was therefore the last provision that applied to identification of successor beneficiaries
as of the date of Decedent B’s death. Decedent B’s sister’s descendants accordingly
became successor beneficiaries of IRA X, with new separate subtrusts of Trust T
created in the name and for the benefit of each descendant to accept the descendant’s
share of IRA X, on the date of Decedent B’s death.

The only applicable descendants of Decedent B’s sister as of the date of Decedent B’s
death are Child C and Child D, of whom Child C is the eldest. Child C is the beneficiary
of Trust V (a subtrust of Trust T) and Child D is the beneficiary of Trust W (also a
subtrust of Trust T). The terms of Trust V provide Child C with powers to appoint Trust
V’s successor beneficiaries upon Child C’s death, and the terms of Trust W include
identical terms with respect to Child D.

On Date 9 (a date after Decedent B’s death and before September 30 of the year
following the year in which Decedent B died), the trustee of Trust V and Trust W (who is
also the trustee of Trust T and Trust U) executed identical limited powers of
appointment over Trust V and Trust W to amend each trust, which you represent
complied with the requirements of Trust T and the laws of State S. Each amendment
provided that any and all amounts distributed from each trust’s primary beneficiary’s
respective share of IRA X must be immediately distributed to or for the benefit of the
primary beneficiary. The amendment also prohibits any further action, such as exercise
of a power of appointment, amendment, modification, decanting, or termination that
might otherwise cause any such distribution of retirement assets to be delayed, to not
be made, or to be made to anyone other than the trust’s beneficiary during the primary
beneficiary’s lifetime. Accordingly, the amendments resulted in trust terms that require
that required minimum and other distributions from Trust V’s and Trust W’s respective
share of IRA X must be immediately and directly paid to Child C and Child D, with no
accumulation of IRA distributions in Trust V or Trust W permitted during the respective
primary beneficiary’s lifetime.
PLR-116072-20 4

As of September 30 of the year following the year in which Decedent B died, the trustee
did not rescind the aforementioned amendments of Trust V and Trust W, and neither
Child C nor Child D has disclaimed interest in IRA X.

Also on Date 9 (a date prior to October 31 of the year following the year in which
Decedent B died), the trustee provided IRA X’s custodian with information concerning
the terms of Trust T, Trust U, Trust V, and Trust W and the identities of Trust U’s
beneficiaries.

In addition, on Date 9 the trustee delivered a letter of instruction to IRA X’s custodian to
separate the assets of IRA X in two equal shares by means of trustee-to-trustee
transfers to two distinct IRAs, each held by IRA X’s custodian for the separate benefit of
the beneficiary of Trust V (IRA Y) and the beneficiary of Trust W (IRA Z). Each
transferee IRA will be maintained in the name of Decedent B (deceased) for the benefit
of the beneficiary’s trust. For example, one transferee IRA, IRA Y, will be maintained in
the name of Decedent B (deceased) for the benefit of Trust V. Distributions from each of
these transferee IRAs will be made over the life expectancy of Child C, the eldest of
Child C and Child D.

You have represented that, at all applicable times, IRA X, IRA Y, and IRA Z have been
maintained in accordance with section 408(a) and applicable tax rules.

Based on the facts and representations, the following rulings were requested:

1. Each child beneficiary of Trust U is treated as having been designated as a
   beneficiary of IRA X in accordance with § 1.401(a)(9)-4, Q&A-5, for purposes of
   determining the distribution period under section 401(a)(9). Required minimum
   distributions from IRA X are calculated using the life expectancy of Child C, the oldest
   child beneficiary.

2. The trustee of Trust U may transfer the assets of IRA X by means of trustee-to-
   trustee transfers to IRAs titled IRA of “Decedent B (deceased) fbo (name of child
   beneficiary’s trust)” in order to separate the interest of each child beneficiary in the
   assets of IRA X, without such transfers constituting taxable distributions under section
   408(d)(1) or rollovers under section 408(d)(3).

Law

Under section 401(a)(9)(A), a trust will not be considered qualified unless the plan
provides that the entire interest of each employee (1) will be distributed to such
employee not later than the required beginning date; or (2) will be distributed, beginning
no later than the required beginning date, over the life of such employee or over the
lives of such employee and a designated beneficiary or over a period not extending
beyond the life expectancy of such employee or the life expectancy of such employee
and a designated beneficiary.
PLR-116072-20 5

Section 401(a)(9)(B)(i) provides that a trust shall not constitute a qualified trust under
the Code unless the plan provides that if the distribution of the employee’s interest has
begun in accordance with section 401(a)(9)(A)(ii), and the employee dies before his
entire interest has been distributed to him, the remaining portion will be distributed at
least as rapidly as under the method being used under section 401(a)(9)(A)(ii) as of the
date of death.

Section 401(a)(9)(C) provides, in relevant part, that the term “required beginning date”
means April 1 of the calendar year following the calendar year in which the employee
attains age 70½.

Section 401(a)(9)(E) provides that “designated beneficiary” means any individual
designated as a beneficiary by the employee.

Section 1.401(a)(9)-4, Q&A-1, provides, in relevant part, that a designated beneficiary is
an individual who is designated as a beneficiary under the plan. An individual may be
designated as a beneficiary under the plan either by the terms of the plan or, if the plan
so provides, by an affirmative election by the employee (or the employee’s surviving
spouse) specifying the beneficiary. A designated beneficiary need not be specified by
name in the plan in order to be a designated beneficiary so long as the individual who is
to be the beneficiary is identifiable under the plan. The member of a class of
beneficiaries capable of contraction or expansion will be treated as being identifiable if it
is possible to identify the class member with the shortest life expectancy.

Section 1.401(a)(9)-4, Q&A-3, provides that only individuals may be designated
beneficiaries for purposes of section 401(a)(9). A person who is not an individual, such
as the employee’s estate or a charitable organization, may not be a designated
beneficiary. If a person other than an individual is designated as a beneficiary of an
employee’s benefit, the employee will be treated as having no designated beneficiary
for purposes of section 401(a)(9), even if there are also individuals designated as
beneficiaries.

Section 1.401(a)(9)-4, Q&A-4, provides in relevant part, that in order to be a designated
beneficiary, an individual must be a beneficiary as of the date of the employee’s death.
Generally, an employee’s designated beneficiary will be determined based on the
beneficiaries designated as of the date of death who remain beneficiaries as of
September 30 of the calendar year following the calendar year of the date of death.

Section 1.401(a)(9)-4, Q&A-5, provides that where a trust is named as a beneficiary of
an employee, the trust is not a designated beneficiary; however, beneficiaries of the
trust with respect to the trust’s interest in the employee’s benefit will be treated as
having been designated as beneficiaries for purposes of determining the distribution
period under section 401(a)(9) if the following requirements are met: (1) the trust is valid
under state law, or would be but for the fact there is no corpus; (2) the trust is
irrevocable or will, by its terms, become irrevocable upon the death of the employee; (3)
the beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in
the employee’s benefit are identifiable within the meaning of § 1.401(a)(9)-4, Q&A-1,
PLR-116072-20 6

from the trust instrument; and (4) relevant documentation has been timely provided to
the plan administrator.

Section 1.401(a)(9)-4, Q&A-5(c), provides that, in the case of a trust having more than
one individual beneficiary, § 1.401(a)(9)-5, Q&A-7, applies in determining the
designated beneficiary whose life expectancy will be used to determine the distribution
period. The subsection further provides that the separate account rules under
§ 1.401(a)(9)-8, Q&A-2, are not available to the beneficiaries of a trust with respect to
the trust’s benefit in the employee’s benefit.

Section 1.401(a)(9)-4, Q&A-6(b), provides, in relevant part, with respect to required
minimum distributions after the death of an employee, that documentation sufficient to
enable the plan administrator to identify beneficiaries of the plan must be provided by
the trustee of the trust to the plan administrator by October 31 of the calendar year
immediately following the calendar year in which the employee died.

Section 1.401(a)(9)-5, Q&A-5(b), provides that if an employee dies before distribution
has begun, the applicable distribution period for calendar years after the calendar year
containing the employee’s date of death and if the employee has a designated
beneficiary, generally the applicable distribution period for minimum distributions for
distribution calendar years after the distribution calendar year containing the employee’s
date of death is the life expectancy (determined in accordance with § 1.401(a)(9)-5,
Q&A-5(c)) of the designated beneficiary.

Section 1.401(a)(9)-5, Q&A-5(c)(1), provides that, with respect to minimum distributions
in any case in which the surviving spouse is not the sole beneficiary, the applicable
distribution period measured by the beneficiary’s remaining life expectancy is
determined using the beneficiary’s age as of the beneficiary’s birthday in the calendar
year immediately following the calendar year of the employee’s death. In subsequent
calendar years, the applicable distribution period is reduced by one for each calendar
year that has elapsed after the calendar year immediately following the calendar year of
the employee’s death.

Section 1.401(a)(9)-5, Q&A-7, provides, in general, that if more than one beneficiary is
designated as a beneficiary with respect to an employee as of the applicable date for
determining the designated beneficiary under A-4 of § 1.401(a)(9)-4, the designated
beneficiary with the shortest life expectancy will be the designated beneficiary for
purposes of determining the applicable distribution period.

Section 1.401(a)(9)-5, Q&A-7(c), Example 2, provides, in general, that if all amounts
distributed to from a decedent’s retirement account to the trustee of decedent’s trust
while the trust’s primary beneficiary is alive is paid directly to the primary beneficiary
upon receipt by the trustee, the residual beneficiaries of the trust are mere potential
successors to the primary beneficiary’s interest in the retirement account. In such case,
the primary beneficiary is the sole designated beneficiary of the account for purposes of
determining the applicable distribution period under section 401(a)(9), and no amounts
PLR-116072-20 7

distributed from the account to the trust are accumulated in the trust during the primary
beneficiary’s lifetime for the benefit of any other beneficiary.

Section 1.401(a)(9)-8, Q&A-2(a)(1), provides that, except as otherwise provided in
Q&A-2, if an employee’s benefit under a defined contribution plan is divided into
separate accounts under the plan, the separate accounts will be aggregated for
purposes of satisfying the rules in section 401(a)(9).

Section 1.401(a)(9)-8, Q&A-2(a)(2), provides that, if the employee’s benefit in a defined
contribution plan is divided into separate accounts and the beneficiaries with respect to
one separate account differ from the beneficiaries with respect to the other separate
accounts of the employee under the plan, for years subsequent to the calendar year
containing the date as of which the separate accounts were established, or date of
death if later, such separate account under the plan is not aggregated with the other
separate accounts under the plan in order to determine whether the distributions from
such separate account under the plan satisfy section 401(a)(9). Instead, the rules in
section 401(a)(9) separately apply to such separate account under the plan. However,
the applicable distribution period for such separate account is determined disregarding
the other beneficiaries of the employee’s benefit only if the separate account is
established on a date no later than the last day of the year following the calendar year
of the employee’s death.

Section 1.401(a)(9)-8, Q&A-3, provides that, for purposes of section 401(a)(9), separate
accounts in an employee’s account are separate portions of an employee’s benefit
reflecting the separate interests of the employee’s beneficiaries under the plan as of the
date of the employee’s death for which separate accounting is maintained. The
separate accounting must allocate all post-death investment gains and losses,
contributions, and forfeitures, for the period prior to the establishment of the separate
accounts, on a pro-rata basis in a consistent and reasonable manner among the
separate accounts.

Section 408(a)(6) provides that, under regulations prescribed by the Secretary, rules
similar to the rules of section 401(a)(9) shall apply to the distribution of the entire
interest of an individual for whose benefit an IRA is maintained.

Section 408(d)(1) provides, generally, that in accordance with the rules of section 72,
amounts paid or distributed from an IRA are included in gross income by the payee or
distributee.

Section 408(d)(3) provides an exception to income inclusion under section 408(d)(1) for
certain distributions from an IRA to the individual for whose benefit the IRA is
maintained that are rolled over within 60 days to another IRA for the benefit of that
individual.

Section 408(d)(3)(C) provides that amounts from an inherited IRA cannot be rolled over
into another IRA. Under section 408(d)(3)(C)(ii), an IRA is treated as an inherited IRA if
the individual for whose benefit the IRA is maintained acquired the IRA by reason of the
PLR-116072-20 8

death of another individual, and such individual is not the surviving spouse of the other
individual.

Section 1.408-2(b)(8) provides that the term beneficiaries on whose behalf an IRA is
established includes (except where the context indicates otherwise) the estate of the
individual, dependents of the individual, and any person designated by the individual to
share in the benefits after the death of the individual.

Section 1.408-8, Q&A-1(a), provides that an IRA is subject to the required minimum
distribution rules provided in section 401(a)(9). In order to satisfy section 401(a)(9), the
rules of §§ 1.401(a)(9)-1 through 1.401(a)(9)-9 must be applied, except as otherwise
provided.

Section 1.408-8, Q&A-1(b), provides, as relevant, that for purposes of applying the
required minimum distribution rules in §§ 1.401(a)(9)-1 through 1.401(a)(9)-9, the IRA
trustee, custodian or issuer is treated as the plan administrator, and the IRA owner is
substituted for the employee.

Section 1.408-8, Q&A-3, provides that in the case of distributions from an IRA, the term
“required beginning date” means April 1 of the calendar year following the calendar year
in which the individual attains age 70½.

Revenue Ruling 78-406, 1978-2 C.B. 157, provides that the trustee-to-trustee transfer of
funds from one IRA maintained by an individual to another IRA maintained by the same
individual, even at the direction of that individual, does not constitute a payment or
distribution includible in gross income.

The Further Consolidated Appropriations Act, 2020, P. L. 116-94 (the Act), was enacted
on December 20, 2019. Division O of the Act, titled “Setting Every Community Up for
Retirement Enhancement Act of 2019” (SECURE Act), amended section 401(a)(9) with
respect to individuals who die after December 31, 2019. The amended provisions do not
apply in this case because Decedent B died before the applicability date of the
SECURE Act amendments.

Analysis

With respect to your first ruling request, § 1.401(a)(9)-4, Q&A-5(c), specifically
precludes the separate account treatment described in § 1.401(a)(9)-8, Q&A-2(a), for
purposes of determining the distribution period under section 401(a)(9), for beneficiaries
of a trust with respect to a trust’s interest as beneficiary of an IRA after the death of the
IRA owner. Accordingly, the child beneficiaries of Trust U with respect to Trust U’s
interest in IRA X must all be taken into account for purposes of determining the
applicable distribution period that applies to each transferee IRA for purposes of
section 401(a)(9).

However, because § 1.401(a)(9)-4, Q&A-5(c), is specifically applicable only to the
determination of the distribution period under section 401(a)(9), § 1.401(a)(9)-4,
PLR-116072-20 9

Q&A-5(c), does not otherwise preclude the creation of separate accounts as described
in § 1.401(a)(9)-8, Q&A-2(a)(2), for beneficiaries of a trust with respect to a trust’s
interest as beneficiary of an IRA after the death of the IRA owner. Accordingly, each
transferee IRA may be maintained separately for purposes of section 401(a)(9) except
for purposes of determining the applicable distribution period.

Accordingly, the child beneficiaries of Trust U will be considered to be designated as
beneficiaries of IRA X for determination of the distribution period under
section 401(a)(9) if Trust U satisfies the requirements of § 1.401(a)(9)-4, Q&A-5(b).

Under the facts, Trust U is the named beneficiary of IRA X. Trust U was established
under Trust T, was valid under the laws of State S, and was irrevocable prior to the
death of Decedent B. In addition, relevant documentation relating to Trust U’s status as
beneficiary of Decedent B’s interest in IRA X was given to IRA X’s custodian by the date
required under § 1.401(a)(9)-4, Q&A-6(b). Further, the beneficiaries of Trust U who are
beneficiaries with respect to Trust U’s interest in IRA X are identifiable, within the
meaning of § 1.401(a)(9)-4, Q&A-1, because these beneficiaries are the only
descendants of Decedent B’s sister named as beneficiaries in Trust U’s trustee’s limited
power of appointment executed before Decedent B’s death on Date 7.

Furthermore, the trustee of Trust V and Trust W executed identical limited powers of
appointment over Trust V and Trust W, amending the trusts, after Decedent B died and
before September 30 of the year following the year in which Decedent B died. The
amendments provided that all distributions from IRA X to or for the benefit of Child C
and Child D must be immediately paid directly to them during their lifetimes. Under
§ 1.401(a)(9)-5, Q&A-7(c), Example 2, any beneficiaries that may be appointed under
the terms of Trust U, Trust W, and Trust V to assume Child C’s or Child D’s interest in
IRA X following the primary beneficiary’s death are treated as mere potential successor
beneficiaries, and Child C and Child D are treated as the designated beneficiaries for
purposes of determining the applicable distribution period under section 401(a)(9).

The trustee of Trust V and Trust W did not rescind the amendments, and neither Child
C nor Child D disclaimed the child’s respective interest in Trust U and IRA X, before
September 30 of the year following the year in which Decedent B died. Accordingly, as
of that September 30, the beneficiaries of Trust U and IRA X for purposes of
determining the applicable distribution period under section 401(a)(9) remained the
same as on the date of Decedent B’s death.

The facts indicate that Trust U satisfies the four requirements of § 1.401(a)(9)-4,
Q&A-5(b), to be treated as a “see-through” trust. Therefore, the two child beneficiaries
of Trust U are treated as having been designated as beneficiaries of IRA X for purposes
of section 401(a)(9).

In this case, under § 1.401(a)(9)-5, Q&A-7, because more than one beneficiary is
designated as a beneficiary, the beneficiary with the shortest life expectancy is the
designated beneficiary for purposes of determining the applicable distribution period
PLR-116072-20 10

under § 1.401(a)(9)-4, Q&A-4. In addition, because Decedent B’s surviving spouse is
not the sole beneficiary, the rule of § 1.401(a)(9)-5, Q&A-5(c)(1), applies.

With respect to your second ruling request, the facts indicate that the Trustee of Trust U
intends to accomplish a trustee-to-trustee transfer on behalf of each beneficiary to
separate the beneficiaries’ interests in IRA X. Such transfers will be into two separate
IRAs established and maintained in the name of “Decedent B (deceased) fbo (name of
child beneficiary’s trust).”

In this case, consistent with Rev. Rul. 78-406, the portion of IRA X that is maintained in
the name of Decedent B (deceased) for the benefit of Child C’s trust (i.e., Trust V) is
being separated from the portions maintained for the benefit of the other child
beneficiary and is being transferred to another IRA maintained in the name of Decedent
B (deceased) for the benefit of Child D’s trust (i.e., Trust W), with no other change in
title from the transferor IRA to the transferee IRA. The fact that each child beneficiary’s
inherited IRA will be held by the child beneficiary’s respective trust does not affect this
conclusion, because the terms of the trust require that all distributions from the inherited
IRA are immediately and directly made to the child beneficiary.

Rulings

Thus, with respect to your ruling requests, we conclude as follows:

1. Each child beneficiary of Trust U is treated as having been designated as a
   beneficiary of IRA X in accordance with § 1.401(a)(9)-4, Q&A-5, for purposes of
   determining the distribution period under section 401(a)(9). Required minimum
   distributions from IRA X are calculated using the life expectancy of Child C, the oldest
   child beneficiary.

2. The trustee of Trust U may transfer the assets of IRA X by means of trustee-to-
   trustee transfers to IRAs titled IRA of “Decedent B (deceased) fbo (name of child
   beneficiary’s trust)” in order to separate the interest of each child beneficiary in the
   assets of IRA X, without such transfers constituting taxable distributions under section
   408(d)(1) or rollovers under section 408(d)(3).

This letter ruling assumes that IRA X satisfied the requirements of section 408 at all
times relevant thereto. It also assumes that the transferee IRAs to be set up for the
benefit of the child beneficiaries will also meet the requirements of section 408 at all
times relevant thereto.

The rulings contained in this letter ruling are based upon information and
representations submitted by Trust U, Trust V, and Trust W and accompanied by a
penalty of perjury statement executed by an appropriate party, as specified in Rev.
Proc. 2021-1, 2021-1 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
PLR-116072-20 11

controlling facts; the facts at the time of the transaction 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. 2021-1, § 11.05.

Except as expressly provided above, no opinion is expressed or implied concerning the
federal income tax consequences of any other aspects of any transaction or item of
income described in this letter ruling.

This letter ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)
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 this letter is
being sent to your authorized representative.

                                       Sincerely,


                                       /s/ Neil Sandhu
                                       ______________________________
                                       Neil Sandhu
                                       Senior Technician Reviewer
                                       Qualified Plans Branch 1
                                       Office of the Associate Chief Counsel
                                       (Employee Benefits, Exempt Organizations,
                                       and Employment Taxes)

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