Tax Law (Questions About Taxes)/401k inheritance


is there tax due on an inherited 401k, either state or fed income tax? Can I roll this over to an IRA without having to pay taxes on it? Do I have to include this amount at probate. I live in Penna.  Does an inherited annuity get handled the same way?


Thanks for your question.

You will have to pay Federal income tax on withdrawals from the 401(k).  State laws vary, in some states, it would not be taxable. Pennsylvania does subject withdrawals to taxation.

If you are inheriting the 401(k) as a spouse, you may roll it into an IRA.  If you are not a spouse you must take withdrawals, either a lump sum, or payments over a period of time. You will be subject to income tax on those withdrawals.

There are a host of types of annuities.  If it was a tax deferred annuity, meaning that the decedent did not pay tax on the earnings, portion of the annuity withdrawals would be taxable. If it was a qualified retirement plan, all of the withdrawals would be taxable.

Hope this helps.

John Stancil, CPA  

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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