Who makes the payment of tax on the post death distribution
When a trust is the beneficiary of an IRA who will pay the income tax on the post death distribution? trust or beneficiary, trust tax rates vs. income tax rates
Who decides?
When a trust is the beneficiary of an IRA who will pay the income tax on the post death distribution? trust or beneficiary, trust tax rates vs. income tax rates
Who decides?
Permalink Submitted by Alan - IRA critic on Wed, 2014-02-26 21:38
That depends on whether the trust accumulates the trust income in the trust or passes it through to the beneficiaries on a K1. When passed through the beneficiaries will report the distributions on their individual returns using their individual tax rates. If accumulated the trust tax rates are considerably higher than the individual rates. The terms of the trust determine this and in some cases the trust provides the trustee with the power to use their own discretion in determining how the trust income is handled.