The original owner of the IRA died in 2019. He was 84 and had been collecting RMD’s since age 70. Upon the owner’s death, the IRA was divided into 4 inherited IRAs for four daughters. However, the irrevocable survivor’s trust indicated the inherited IRA for daughter number 2 was to be administered by the trustee. In 2019, the original owner had not taken the RMD prior to his death. Each daughter was required to take an RMD in 2019. In 2020, none of the inherited IRAs had distributions due to the covid RMD postponement.

In January 2021, daughter number 2 died at age 58. The amount in her inherited IRA was distributed in a check to the trustee for deposit to the irrevocable survivor’s trust. If the amount is distributed to the remaining 3 daughters in 2021, per the trust rules, is the Inherited IRA amount taxable to the TRUST at TRUST rates, or to the 3 daughters as distributions at their personal tax rates ?