Will cashing out an inherited 401(k) trigger taxes or penalties? | NC

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Q: Will cashing out an inherited 401(k) through the estate trigger taxes or early-withdrawal penalties? A: Usually, yes on taxes—and usually, no on the early-withdrawal penalty. A lump-sum payout from a pre-tax four oh one k is commonly taxable as ordinary income to whoever receives the money, either the named beneficiary or the estate. But because the distribution is happening after the account…