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.
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