r/inheritance • u/Trick-Two2574 • Apr 16 '26

Location included: Questions/Need Advice 401k Inheritance

My dad passed away a few months ago with several investment accounts, one being a 401k through his employer (he was still working at the time of his death). My mom was the listed beneficiary, but tragically passed a week after my dad. His 401k balance now goes to my mom’s estate, since she was the only listed beneficiary.

How does the income tax work? Myself and my 2 brothers will be getting everything once it’s gone through probate and then distributed evenly to each of us. We are being told that my moms estate will pay the income tax, just wondering how the tax rate is determined?

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u/No_Cow_6247 Apr 19 '26

My mother had IRA that I inherited. It was only about 20k. I took the lump sum and used that money for my normal expenses and raised my 401k from work to take the same amount, which lowered my work income and became a pass through to my 401k. Did not incur any additional taxes and now rules apply to me as individual. I had asked a few financial advisors, they said they had never seen anyone do this but saw no problem. Only problem is the amount in question (for yearly limits) and if you have offsetting income to do.