Executor of Estate/trust

MDP63 · ‎January 30, 2023

My mother recently passed and I am executor of her estate. She has a trust and a 401k outside the trust. The 401k names the trust as beneficiary. Who pays the taxes on the 401k distribution?...the trust or the ultimate beneficiaries of the trust? Do I file a 1041 and pass the income through to the beneficiaries or can I have the trust pay the tax on the 401k? the death is in 2023...can I file immediately? anything else I need to know re: taxes on either the trust or the 401k distribution?

GeorgeM777 · ‎January 30, 2023

The trust beneficiaries will pay the tax on any trust distributions. To the extent trust income is not distributed, the trust will pay the tax on such income. Income that is distributed to the beneficiaries keeps the same character as it had in the trust. For example, if the trust had a short-term capital gain, and distributes that gain, the beneficiaries have a short-term capital gain.

No, you cannot file immediately. The IRS provides the following regarding Form 1041.

For calendar year estates and trusts, file Form 1041 and Schedule(s) K-1 on or before April 15 of the following year.

For fiscal year estates and trusts, file Form 1041 by the 15th day of the 4th month following the close of the tax year.

File an Estate Tax Income Tax Return

@MDP63

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

MDP63 · ‎January 31, 2023

Ok. I think that makes sense, but to summarize my understanding…The 401k distributes into the trust, so I complete form 1041 and each of the beneficiaries get a K-1 that they file and includes their pro-rate portion of the tax liability on their 2023 taxes.