Inherited life insurance moved to mutual investment account do I have to claim taxes on this month?

[zps34]

I am the beneficiary from New York Life Insurance and Annuity Corp.  I deposited the check with Edward Jones Investments.  Am I required to pay taxes on this transfer of money or because I moved into investment accounts I don't pay taxes on it?  I had taxes taken out before the check was issued, but now I don't think I needed to do that and I can get that refunded.  Please advise.  Thank you.  

[RobertG]

Generally, life insurance proceeds after the insured's death are not reported as income to the beneficiaries.

However, any interest on the proceeds (such as when the proceeds are delayed) are reportable. The beneficiaries should receive a Form 1099-INT with the amount of the interest paid.

When proceeds from a life insurance policy are transferred as part of a financial arrangement before the insured’s death, they're taxable.

[zps34]

I received a 1099-R for the gross distribution and it shows the federal income tax withheld that was done at our request in case we had to pay taxes on it.  

We received a 1099-INT for interest which we have claimed.  

Based on your response, it does sound correct that we would be getting the majority of the federal tax withheld on the money back.  Is our understanding correct?  

[macuser_22]

If there was box 4 Federal withholding on the 1099-R then that is added to all other W02 and 1099 withholding the the  1040 line 17 that will be applied to offset (pay) and tax liability.   If more than  the tax liability then it is a refund.

[DavidD66 · Accepted solution]

If the distribution you received was due to the death of the insured, then the proceeds are not taxable, as mentioned above.