Lump sum inherited 401k distribution - K-1 or 1099R

Forum|Forum|1 year ago
September 24, 2024
1 reply
0 views

My mother passed away and had a 401k. Lump sum distibutions were made from the 401k to me and my siblings. Our CPA issued a K-1 with the amount of the distribution to report to the IRS. Can I do that on Schedule E? Or do we also need a 1099R?

Not A Product Question

Opus 17

Employee

That depends on what actually happened.

Under one set of facts (probably more common), if you were the beneficiary of the 401k, you would become the owner of an inherited 401k account. There would be certain rules about when and how much you needed to withdraw, and you would get a 1099-R from the plan administrator if you made withdrawals.

However, if no beneficiary was designated, or if the estate was the beneficiary, then the 401k plan might be cashed out by the estate and distributed as a lump sum. In that case you get a K-1 from the estate, and that is taxable. You don't get a 1099-R because you never had a 401k account (from this plan)--it was cashed out before it got to you. That sounds like what happened.

CKN12Author

Thank you. This is just the answer I was looking for. The K-1 was received and I reported the income on Schedule E.

dmertz

Employee

As Opus 17 suggests, the facts indicate that your mother's estate, not you, received the distribution from the 401(k) and you received distributable net income from the estate.