Yes, the custodian setting up an IRA for the estate and distributing checks did raise my eye brow and was the main point of confusion for me. Honestly, I have not ran into that scenario before. 

The will does list four beneficiaries to which all property should be distributed equally. 

You mentioned withholding taxes...The executrix informed me that each beneficiary attempted to have income tax withholding on their distributions. However, the custodian did not do that for the beneficiaries. But, an amount was withheld and listed on the estate's 1099-R (reported on 1041 Part II- Payments Line 14). In other words, withholding did occur when the estate "received" the IRA proceeds, but no withholding when the beneficiary's received their share of the account.

Given that, my view is that the estate would distribute the income to the beneficiaries and any potential taxation. Am I processing the situation correctly or is additional due diligence required?