Is there tax due on an inherited 401k, either state or fed income tax? Can I roll this over to an IRA without having to pay taxes on it? Do I have to include this amount at probate. I live in Penna. Does an inherited annuity get handled the same way?
Tax Professional Answers
If you are inheriting the 401(k) as a spouse, you may roll it into an IRA. If you are not a spouse you must take withdrawals, either a lump sum, or payments over a period of time. You will be subject to income tax on those withdrawals.
There are a host of types of annuities. If it was a tax deferred annuity, meaning that the decedent did not pay tax on the earnings, portion of the annuity withdrawals would be taxable. If it was a qualified retirement plan, all of the withdrawals would be taxable.
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