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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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Parent died and we are beneficiary on retirement plan. If we

Customer Question

Parent died and we are beneficiary on retirement plan. If we take the money in a lump sum distribution will we have to pay taxes?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

It depends on what type of retirement plant it is. If the contributions were made pretax like 401K or IRA than the distribution will be taxable, regardless how it is distributed, lump sum or periodic payments.

If the contributions were made after tax like Roth IRA, than the distribution will be tax free.

Expert:  emc011075 replied 1 year ago.

Most employer sponsored retirement plans are pretax. Very few employees pick up aftertax contribution like Roth 401K. If it is an IRA, the administrator of the plan should be able to tell you how much of the money are pretax and how much after tax. If it is IRA, I would also check with your parent tax adviser. Some of the IRA contribution could be nondeductible, which makes it after tax.

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