Q&A with the Pennsylvania Department of Revenue

Retired spouse passes away and leaves IRA to spouse

Sep 23, 2014

Retired husband, aged 78 passes away, and leaves an IRA to his 77 year old retired wife. Wife rolls the deceased husband’s IRA into her own IRA account. Note that husband received no PIT tax deduction over the years when IRA taxation was being deferred for federal taxation. The PIT was fully paid on the IRA deferral during husband’s life. Husband’s RMD was not subject to tax.

a. When husband dies and after the wife rolls over her deceased husband’s IRA into her own account, she takes annual RMD amounts each subsequent year. Is PIT due once again when RMD occur each year?

Answer
No, because the wife is over age 59½. The initial distribution to the wife would be included in eligibility income for Schedule SP purposes, but is not taxable income.

b. Does it matter if wife did not rollover the deceased husband’s IRA into her own account, and instead kept it in a “rollover” account?

Answer
No.

c. Does it matter if IRA was left by deceased husband to his retired 62 year old child?

Answer
No. The transfer to the son is exempt as a distribution due to death (1099-R code 4). However, the distribution to the son would be included in eligibility income for Schedule SP purposes, but is not taxable income.

d. Does it matter if IRA was left by deceased husband to his retired girlfriend, age 65?

Answer
No. The transfer to the girlfriend is exempt as a distribution due to death (1099-R code 4). However, the distribution to the girlfriend would be included in eligibility income for Schedule SP purposes, but is not taxable income.

Note: in all of the above examples, PIT tax has been paid on the deferred income.

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.