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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13532
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Can I gift an inherited 401k to my brother?

Resolved Question:

Can I gift an inherited 401k to my brother?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

Unfortunately, the only way to gift a 401(k) would be to withdraw the funds, pay tax, and then gift the proceeds.

MyVirtualCPA :

You can't transfer ownership of a 401(k)

MyVirtualCPA :

I'm truly sorry if you had hoped to hear otherwise.

MyVirtualCPA :

But, unfortunately these tax deferred accounts are not easily transferable, typically only transferable upon death

Customer:

Thank you. My brother passed away. He was supposed to leave this particular 401K to my other brother. He never did. I am executor and wanted to get that money to him. But it not fair for me to have to pay taxes.

MyVirtualCPA :

Unfortunately, as you are the beneficiary of the 401(k) there's not another option. And I'm sorry to hear about your loss...

MyVirtualCPA :

The IRS keeps track of who owns what, and as this is untaxed money it has to be taxed when it is taken out. There's no effective ay of transferring the ownership though of the account into someone else's name.

Customer:

Thank you

MyVirtualCPA :

You're welcome. Sorry if you expected otherwise.

MyVirtualCPA :

Is there anything else that I can assist you with today? If not, please rate my response as "excellent" so that I may receive credit for assisting you today

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13532
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
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Expert:  Megan C replied 1 year ago.
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Expert:  Megan C replied 1 year ago.

Tom,

I will clarify that my answer stands if you are the beneficiary and not your other brother. If no beneficiary was named, then state law will dictate who gets what in terms of the retirement account.

 

If your brother died without a spouse or children, and you and your brother inherited the 401(k) by default (without a designated beneficiary) the disclaimer rule may apply. I would contact the estate's attorney to discuss the possibility of the disclaimer option.

Thanks!

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