Are inherited 457(b) plans taxable

jmthorson65 · ‎May 31, 2019

I inherited (named as a beneficiary) as a non-spouse beneficiary on a 457 DCP account, a portion of my cousin's 457 DCP,which I cashed out and used to purchase a home. Is the money I received from the 457 taxable income on my state and federal tax returns.

VolvoGirl · ‎May 31, 2019

Yes you should get a 1099R for it. If it was taxable to the deceased it is taxable to you now.

ScruffyCurmudgeon · ‎May 31, 2019

A Section 457 Savings Plan is often used by municipalities to avoid having to pay employer side of employment taxes. Instead the employee contributes to a deferred income savings plan. So none of the money, either funds paid in or any income into the account, has yet to be taxed.

When you take money out of this account that you inherited, you will have to pay ordinary income tax on this and the amount that is to be taxed will be reported on the Form 1099-R issued to you at the end of the year in which you take money out.

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Are inherited 457(b) plans taxable