Estate as beneficiary
IRA has named estate the beneficiary and my client is named in will and will receive money. Distribution is going into estate account and Personal Rep of estate is distributing from there. Will my client pay the income taxes or the estate?
Permalink Submitted by Alan - IRA critic on Fri, 2014-10-03 19:58
Typically, the estate will pass the distribution through to the will beneficiary on a K1 and the beneficiary will pay the tax at his marginal rate, not the estate. Estate rates are much higher than individual rates. A full lump sum distribution is not required, and it is usually better to have the executor assign the inherited IRA to the will beneficiary. The beneficiary can then use the 5 year rule if owner passed prior to the required beginning date or the decedent’s remaining life expectancy if owner passed after the RBD.