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If you inherited your aunt's account then you are taxed the same way she would have been taxed on the distribution had she not passed away. The account was a deferred account which menas not taxable until distributed.
You will receive a 1099R and on that the taxable portion will be reported as well as the taxes withheld.
You include this with your income on your tax return for the year.
There should be a Code 4 on the 1099R that denotes this will not be subject to any additional penalty for early distribution. The tax withheld will act as a payment for tax.
Please accept my condolences regarding the passing of your aunt.
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