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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29575
Experience:  Taxes, Immigration, Labor Relations
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I have some question about my inherited 401 k and

Customer Question

I have some question about my inherited 401 k and equity/mutual funds liquidation. I want to buy a house and wanted to use my inheritance, I owe 125 down on an offer to buy a house. My investments, 80k mutual funds, 401k of 42K my mother left me. I am not concerned about the capital gains. Is there any way around the distribution fees if i invest it straight into a piece of property?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
i alos have 50k from a previous employer 401, I am 50 years old
Customer: replied 1 year ago.
i am concerned it should read
Expert:  Lev replied 1 year ago.

To address your main question - if you realize the taxable income - it will be included into your gross income
We may not avoid that by purchasing another property.
As soon as funds from 401k are distributed - that amount becomes taxable.

Expert:  Lev replied 1 year ago.

So - what we may do - estimate your possible tax liability.
For 401k distribution - the full distributed amount is taxable as regular income

For mutual fund shares - we need to estimate a gain

The basis for inherited assets is the fair market value of shares when your mother passed away.

Then we adjust the basis by any reinvested dividends and distributions.

The gain is calculated as (selling price) MINUS (adjusted basis)


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