Skip to Content
Personal Finance

12 No-Tax and Low-Tax Retirement Plan Distributions

If a recipient qualifies for one of these deals, the distribution may be taxed more favorably than as a 100% taxable chunk of ordinary income.

Question: I have inherited a retirement plan account and need to cash out the account as soon as possible. What tax implications should I expect? Is the distribution always treated as ordinary income in the year I receive it?

Answer: The answer is probably yes--the distribution is probably fully includible as ordinary income in your gross income, but here's how to be sure: Run through the following checklist of no-tax and low-tax retirement plan distributions. If your situation qualifies for one of these deals, the distribution may be taxed more favorably than as a 100% taxable chunk of ordinary income.

To view this article, become a Morningstar Basic member.

Register for Free