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i received a lump sum death benefit from my aunt who passed october2021. she was 90. is there a death benefit exclusion

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February 21, 2022
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I received a death benefit payment from my 90 year aunt who passed October 2021. Is there a death benefit exclusion

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Best answer by RaifH

No, there is no death benefit exclusion for payments from your aunt's pension. Please see the Inherited IRAs and Retirement Accounts section of this TurboTax article. Since the pension is generally funded with untaxed money, the distributions are still taxed, even if it is the beneficiary who receives them.

The 1099-R for the distribution from your aunt's pension should have the information required to accurately report this on your taxes. The entire distribution might not be taxable if your aunt had any employee contributions with after-tax dollars. The code in Box 7 should be a 4.

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FangxiaL

You don't need to include it on your tax return. Inheritance is considered tax-free income unless the payment is from a retirement plan.

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hilliarddebbieAuthor

The death benefit was from her pension retirement plan. Please help!

R

RaifHAnswer

No, there is no death benefit exclusion for payments from your aunt's pension. Please see the Inherited IRAs and Retirement Accounts section of this TurboTax article. Since the pension is generally funded with untaxed money, the distributions are still taxed, even if it is the beneficiary who receives them.

The 1099-R for the distribution from your aunt's pension should have the information required to accurately report this on your taxes. The entire distribution might not be taxable if your aunt had any employee contributions with after-tax dollars. The code in Box 7 should be a 4.