The bank is not in a position to give tax advice nor does it change its processes for a death distribution based on what a customer claims their tax situation is.
Process the death distribution according to your procedures and send the beneficiary a 1099-R at the appropriate time. What the beneficiary does or does not do with that information is between them and the IRS.
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Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
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