Legal Question in Wills and Trusts in Illinois

Re: Estate distribution

401(k)s are part of a taxable estate, meaning they count toward the $1,500,000 exemption amount over which an estate is subject to federal estate tax this year.

For purposes of income tax, it depends who is named the beneficiary on the account: the estate of the deceased, or a beneficiary. The beneficiary will pay the income tax on the distribution of the fund.