401k

Hi, before mailing my check to the IRS, I just wanted to get another expert to support what I am being told to do from my tax person. My brother passed away in the state of TX in January 2015. He had no kids and was divorced. He had a 401k through Vanguard that, as Administrator, I distributed to an Estate account at the bank. Vanguard withheld 10% (63k of the value of 630k). After paying bills etc. I recently distributed equal amounts of the remainder to myself and my two siblings…~181k apiece. What I am sending to the IRS is a check in the amount of ~66k (36% or so) for my personal return (actually lower than 66k since the total was reduced for educational expenses etc.) Anyway, if anyone is able to confirm this is somewhat appropriate, it would be appreciated.



  • This sounds like an IRA, not a 401k since the withholding rate on a 401k is 20% and an IRA the default rate is 10%. Since the tax rates for an estate are very high, you should get some help in filing a 1041 for the estate and should be passing through the IRA proceeds on a K1 for Form 1041. This would result in each beneficiary paying taxes on the IRA income at their own individual rates rather at the higher estate rates. The withholding should have been declined as well, since if the estate does not pay taxes, the withholding is for the wrong account.
  • For now, please clarify whether this was a 401k or an IRA. 


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