As I explained above, the IRS has issued many Private Letter Rulings indicating that transferring the inherited IRA out of the estate to inherited IRAs is permissible. I've know of no contrary ruling by the IRS denying this. The only reason that the IRA would be required to be distributed to the estate is if the IRA agreement prohibited transfer of an IRA inherited by the estate.
Investigate transferring the inherited IRA to an inherited IRA for the benefit of the estate at another custodian who will be accommodating of a request to transfer the IRA intact to inherited IRAs for the benefit of estate beneficiaries.
What is not permitted is rolling over an inherited qualified retirement plan (not an IRA) to an inherited IRA for the benefit of the estate; such a rollover is only permitted if the beneficiary of the plan is an individual. If the account is in a qualified retirement plan, not in an IRA, the account can only be distributed to the estate and this income to the estate distributed to beneficiaries of the estate. Unless the qualified retirement plan requires a total distribution under the circumstances, the estate would need to be kept open to receive distributions from the inherited qualified retirement plan and pass the income to the estate beneficiaries if distributions are to be received over the number of years .
