Q: I inherited a 403b, do I have to pay the inheritance tax back to the estate?
The 403b is a traditional 403b that my aunt left me as the sole beneficiary. I plan on taking drawdowns over the 10 year time frame. I understand I will have to pay income tax each year, but am I required to reimburse the estate the 15% inheritance tax? It is considered a non-probate asset.
A:
You seem to be a well-informed person.
You give short shrift to underlying, probably important, facts, however.
For instance, does the aunt's Will pass the 403b interest to you?
Such obligations are usually contractual, between the decedent and the purchaser (aunt?), naming you as payee. If that's the fact here, then most probably, as you say in an immediately preceding post, the 403b interest will be considered a non-probate legacy, and non-taxable at the PA inheritance tax rate.
Confer with an experienced PA attorney who has some knowledge of the assigned probate judge in the decedent's county.
A: Just an add-on. Usually the Estate pays the PA inheritance tax on bequests stated in the Wll. If that's the case here, the estate, not you as beneficiary, will be liable for the attributable inheritance tax.
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