Jul 2, 2012, 08:25 AM
My father passed away recently and listed his 401K beneficiary as the oldest of 5 children (my brother) with the intention that it would get divided up evenly (which is still the plan). My brother has received the money out of the 401K (minus a large chunk of it from withdrawling it early). Is that chunk of money considered tax or will the remaining bit of it be taxed again as income for him. Also, if it is still taxed at the end of the year, and then divided up in 2013, would that division amonst the 5 children get taxed again if each payout ends up being over $5,000 per kid (would each kid then have to report it as income for 2013 and would the money be taxed for a second time). What would be the best way to divide the money and minimize multiple taxes.