I am a beneficiary of my step fathers 401K. All the money is pre-tax so I know there will be a 20% federal tax withholding.
He lived in Ohio and passed away in Ohio. I also live in Ohio. There is a choice on the form to deduct state taxes. My understanding is in Ohio there is no state tax on 401K inheritance. Is my understanding correct?
031355
3 Replies
Vanessa A
Expert Alumni
Mar 22, 2022 5:33:05 AM
Yes, you would want to have state taxes withheld on the 401K distribution as the state of Ohio does tax retirement benefits that are taxable by the federal government.
shawnMsrm
Level 3
Mar 22, 2022 5:41:02 AM
Thank you for the reply.
Just to confirm, I am a beneficiary on this account. There is not retirement, but I am receiving these funds as a beneficiary for someone who has passed away.
MinhT1
Expert Alumni
Mar 22, 2022 5:54:37 AM
As the beneficiary of an inherited 401(k) account, distributions are taxable both at the Federal and Ohio level.
On the other hand, Ohio has tax credits based on retirement income.