Estate is beneficiary of Traditional IRA
Traditional IRA had no beneficiaries and was left to the estate of the decedent.
The estate took a distribution from the IRA shortly after the death occurred.
The amount is generally taxable on form 1041 of the estate, but can the estate distribute the taxable income to the K-1 beneficiaries?
If yes, must the cash be distributed to the beneficiaries?
Permalink Submitted by mk foss on Sat, 2010-05-22 02:35
Estates operate under the jurisdiction of the probate court. The court tries to ensure that creditors and taxes are paid before assets are distributed to beneficiaries. Distributions from an estate (that are not specific bequests) carry out taxable income which is reported by and taxed to the beneficiaries receiving assets. In order for the tax burden on an IRA distribution to pass to the beneficiaries – the beneficiaries must receive cash or assets in the same tax year.If the court has not allowed distributions before the end of the tax year in which the distribution is received, generally the estate must pay the income tax.