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fjroblez
New Member

I inherited a 401K, the 1099-R indicates Code 4 in box 7. It is not eligible for a rollover. I paid the Federal Tax, is there a tax owed to the state of California?

It is a non-spouse distribution 1099-R, with only code 4 in box 7, I was told at the time of distribution that I would not have to pay tax in the state of California on the distribution if it is not eligible for rollover, there are no other codes in box 7. My Turbo Tax program shows an additional 2500.00 owed. 

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DS30
New Member

I inherited a 401K, the 1099-R indicates Code 4 in box 7. It is not eligible for a rollover. I paid the Federal Tax, is there a tax owed to the state of California?

It depends -

If you are a resident of CA, then you will have to pay CA state income taxes on this inherited 401(k) distribution if the coding in box 7 is 4 (death distribution) and this was a non-spousal inheritance. (A spousal rollover distribution, on the other hand, would not be subject to tax on the rollover distribution.) There is nothing in the CA state tax law that exempts from CA state taxation a non-spousal distribution from an inherited 401(k) receive while a resident of CA.  The State of California follows federal tax policy regarding 401(k) distributions on non-spousal inherited 401(k)s.

If you are a nonresident of CA or received the inherited 401(k) distribution before or after being a resident of CA, then this distribution would NOT be taxable in the state of CA. In this case, the distribution would be considered sourced to your resident state at the time of distribution regardless if the actual contributions were made in the state of CA.

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1 Reply
DS30
New Member

I inherited a 401K, the 1099-R indicates Code 4 in box 7. It is not eligible for a rollover. I paid the Federal Tax, is there a tax owed to the state of California?

It depends -

If you are a resident of CA, then you will have to pay CA state income taxes on this inherited 401(k) distribution if the coding in box 7 is 4 (death distribution) and this was a non-spousal inheritance. (A spousal rollover distribution, on the other hand, would not be subject to tax on the rollover distribution.) There is nothing in the CA state tax law that exempts from CA state taxation a non-spousal distribution from an inherited 401(k) receive while a resident of CA.  The State of California follows federal tax policy regarding 401(k) distributions on non-spousal inherited 401(k)s.

If you are a nonresident of CA or received the inherited 401(k) distribution before or after being a resident of CA, then this distribution would NOT be taxable in the state of CA. In this case, the distribution would be considered sourced to your resident state at the time of distribution regardless if the actual contributions were made in the state of CA.

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