IRA Distributions to an Estate
I have a situation where a relative passed away. He has approximately
$1,000,000 in an IRA that did not have any beneficiaries listed.
His will calls for the entire amount to be donated to various charities.
Will the estate have to pay income tax on the IRA distribution prior to it
being distributed to the charities? Or does the entire amount get distributed
tax free?
Permalink Submitted by Alan - IRA critic on Thu, 2019-01-10 00:03
It is amazing how often this happens. First, the IRA agreement should be examined to determine if there is a default beneficiary living. If not, then the executor should attempt to assign the inherited IRA directly to the charities in appropriate shares. This was approved by IRS PLR 2013 30011 and would avoid a distribution to the estate and charitable deduction by the estate on Form 1041, however some IRA custodians may resist since assignments are not being made to individual estate beneficiaries. The distribution approach should be Plan B.
Permalink Submitted by Bruce Steiner on Sun, 2019-01-13 11:31
What exactly does the Will say? Did he leave dollar amounts to the charities? Or did he leave his entire estate, or his residuary estate, to the charities?