They will not distribute directly to the estate beneficiaries, only to the estate itself. While you could pass this distribution out of the estate on a K1 to each beneficiary, who would then pay the taxes, that would mean that the entire share for each beneficiary will be taxable in 2025.

The solution is to request an assignment of the estate IRA balance to each beneficiary in the form of their own inherited IRA accounts at the bank. They could then take distributions either using the decedent’s LE or the 5 year rule if decedent passed prior to RBD. They would be in full control of their inherited IRAs. The estate would no longer have to deal with the inherited IRA and a total distribution would be avoided.

All that said, the bank would have to honor your assignment request, and banks are about the worst when it comes to accepting assignment requests. But you could try. Likely, the more beneficiaries of the estate there are, the less likely the bank will cooperate with the assignment request.

Note that assignment is by direct transfer and is not a taxable event (no 1099R). However, if the bank were to write a check to either the estate or to a beneficiary of the estate, that amount cannot be rolled over and will be immediately taxable.

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