03 Oct Should I withhold tax from inherited 401(k)?
Photo: hibbard/morguefile.comQ. I inherited a 401(k) plan that was my husband’s. I am 63. I received a letter that I would receive a Required Minimum Distribution (RMD) in December 2017. This was an employer matching account so there have been no contributions since his death. Is there a suggested tax I should have taken out prior to my receiving payment?
— Planning
A. This is the kind of question you need to take to a tax preparer who knows your entire financial situation.
The recommended withholding would vary based on your personal finances, said Kenneth Bagner, a certified public accountant with Sobel and Co. in Livingston.
“In the first year of passing of a spouse, you can still file married jointly but after the first year, you are single unless you qualify for head of household status,” Bagner said. “This can substantially affect tax responsibilities as well as any other income you may have.”
So it sounds like it’s time for you to find a good tax preparer. Learn more here.
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This post was first published in October 2017.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.