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    droop65's Avatar
    droop65 Posts: 1, Reputation: 1
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    #1

    Oct 19, 2012, 10:50 PM
    Beneficiary 401k disbursment and state inheritance taxes
    My father passed away recently... he lived in Pennsylvania and so do I. is the beneficiary dibursement liable to state inheritance taxes as well and income taxes?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Oct 20, 2012, 09:10 AM
    There are NO income taxes on inheritances at either the federal or state level.

    There IS a Pennsylvania inheritance tax. I believe your tax rate will be 4.5%. See link below:

    Inheritance Tax
    MLSNC's Avatar
    MLSNC Posts: 158, Reputation: 17
    Junior Member
    		  
    #3

    Oct 21, 2012, 07:15 PM
    I may be a little confused on this question, but if you receive money out of your father's 401(k) I believe it will be subject to federal income tax. If you have not taken any action, that is the money is still in the 401(k), you may want to consult with a professional because you have several options available to you. If you have already received the money you are going to get a 1099 at the end of the year.

    If the estate is the beneficiary and distributing the funds through the estate, then the estate should get the 1099 and pay the taxes. The distribution would then be taxable to the estate and be tax-free to you, but the distribution to you could be net of the taxes.

    Do not know about Pennsylvania so I will have to defer on that.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Oct 21, 2012, 07:37 PM
    MLSNC:

    Good catch; the wording of the post would indicate that it is a 401(k) or IRA disbursement.

    I endorse MLSNC's advice.
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