[WSBAPT] Non pro rata allocation of taxable income to beneficiaries

[Marcus Fry]

Eric:
I disagree about "no rollover options."  First, it's technically not a rollover, as rollovers are only for spouses.  However, many financial institutions permit the PR to instruct the establishment of inherited IRAs in each beneficiary's name.  Natalie Choate's website list some good companies. http://www.ataxplan.com/bulletinboard/ira_providers.cfm

I suggest moving the IRA to another institution as suggested by Choate if the one you are at will not cooperate.

Marcus J. Fry
Lyon, Weigand & Gustafson, P.S.
Adoption Attorney*
P.O. Box 1689
Yakima, Washington  98907
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Thursday, April 02, 2015 3:57 PM
To: WSBA Probate & Trust listserve (wsbapt at lists.wsbarppt.com)
Subject: [WSBAPT] Non pro rata allocation of taxable income to beneficiaries

Estate has four equal beneficiaries. Decedent had an IRA that paid directly to Estate, so no rollover options.

One of the beneficiaries is in a very low tax bracket, and all four beneficiaries agree that they'd like all the tax liability for the IRA allocated to that one beneficiary. (There's enough other cash in the estate to allow complete distribution of the IRA to one and make compensatory distributions to the other three of untaxed inheritance dollars.)

Is that allowed? So the Estate would do a tax return and issue K-1s, allocating all income liability to one out of the four beneficiaries, and none to the other three?

Any idea where I would look for the governing rule? IRS Code or Regs I would guess, but not sure where...

Sincerely,

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1320 University St
Seattle WA  98101-2837
phone 206-625-0092
fax 206-625-9040

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