Inherited IRA with two beneficiaries under a trust

[jzava]

At the time of his death, the father of my client had an IRA at a bank. The IRA was under a family trust with two brothers as the named beneficiaries The brothers were required by the bank to make a required minimum distribution in 2024.  Each brother received 50% of the withdrawal, the bank sent each brother a separate letter indicating the gross amount allocated to each brother and the amount of individual federal and state taxes withheld from each brother’s distribution.  In January 2025 the bank issued one (1) 1099R to the Trust for the total amount withdrawn and the total amount of federal and state taxes.  Questions: (1) how do I allocated my client’s 50% share of the distribution, (2) How and where do I report only the 50% share of the income and withheld taxes for my client?

[sjrcpa]

I think the Bank needs to correct that 1099-R and issue one to each brother.

Otherwise the Trust needs to file a 1041. Each brother gets a K-1 for their 50% but the withholding doesn't pass through.

[BobKamman]

What is missing here is, who is the trustee?  Maybe this involves a bank trust department.  But then, why would the bank be sending itself a 1099-R?  In any case, I wouldn't be putting too much money in that bank.  Banks can't require anyone to take withdrawals from an IRA, nor can they require tax withholding on IRA distributions.  So, what is right with this picture?  

[qbteachmt]

"The IRA was under a family trust with two brothers as the named beneficiaries"

Was? or Is? When was the death of the father?

The story as stated is confusing. An IRA isn't owned by the Trust from the beginning, so was the IRA put into the trust (as being beneficiary) upon death? That means the Trustee on behalf of the Trust took all the IRA actions and then did the disbursements. Someone needs to do a Trust return.

The Trust can have the IRA treated as inherited and make one account for each brother. Is there more activity or assets in the Trust than just this IRA? There are two different rules for this: 5-year or 10-year. The trustee probably should review all of this with the brothers.

[BobKamman]

But who is the trustee? Oh, I see, that's a secret.