[WSBAPT] Mandatory withholding on tax deferred account paid to Estate

[Chris Moore]

I just had one of these.  I decided NO withholding.  Any tax withheld would
be reported under the tax ID# of the estate.  Since you plan to immediately
distribute, then you have the problem of how to distribute the withholding
credit and get the proper information to the IRS for each beneficiary.  In
my case, like yours, the amounts were relatively small, so I chose no
withholding and will advise the beneficiaries of the taxable portion of the
income on their K-1 forms.



Sincerely,

*Chris J. Moore*
Christopher J. Moore, JD, CPA, AEP®, EPLS*
Creason, Moore, Dokken & Geidl, PLLC
Lawyers
1219 Idaho Street, POB 835
Lewiston, Idaho 83501-0835
Phone: 208-743-1516; Fax: 208-746-2231
Website: www.cmd-law.com

*Certified as an Estate Planning Law Specialist by the Estate Law
Specialist Board, Inc., the only estate planning certification entity
approved by both the American Bar Association and the Idaho State Bar
Association.
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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, February 26, 2015 4:16 PM
*To:* WSBA Probate & Trust listserve (wsbapt at lists.wsbarppt.com)
*Subject:* [WSBAPT] Mandatory withholding on tax deferred account paid to
Estate



Decedent has a tax-deferred account of about $35,000 that has no named
beneficiary and will be paid to Estate. I honestly can't remember the last
time I had this problem, if I ever have. The Estate will distribute pretty
quickly to the five heirs ($7,000 each), who of course will have to take
the money as income and pay income taxes.



Should we opt to allow the 20% withholding from the payment to the Estate,
or tell the custodian to send the Estate the entire amount, no withholding,
and let the beneficiaries deal with it? Are there significant pros and cons
to both options?



Sincerely,



Eric



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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