Hello stil,
There is no inheritance tax at the federal level. Instead, the IRS imposes estate taxes, but those only apply to estates which exceed a certain value. In 2009 the minimum estate value must be $3.5 million before the estate is subject to federal estate tax.
The state of NJ does impose an inheritance tax, but only to certain classes of beneficiaries. In the case of assets passing from a child to a parent, the NJ inheritance tax does not apply.
Since this money is part of a 401k plan which is tax deferred, then regular income taxes will be due when the money is withdrawn. But there is no separate inheritance tax due on this money.
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Thank you stil
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad