When a person inherits a retirement fund that was created with pre-tax dollars (like a 403(b) plan), the non spousal beneficiary of the fund with need to include any payments from this fund as part of their taxable income.
The only way to avoid including the full amount is if there is any nondeductible contributions to the retirement fund. (These would be contributions that were made with post tax dollars). For 403(b) plans this is highly unlikely but you may want to check with the funds administrator to see if there was any basis in this account.
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