Does anyone know if the financial institution you transfer the inherited 401k to matters? I've heard some places handle stretch IRAs better than others since the SECURE Act changes. I'm in a similar situation where I qualify as an eligible designated beneficiary (I'm disabled) but worried about choosing the right place to transfer my late husband's 401k.

I'm dealing with a very similar situation and wanted to share what I learned from my estate attorney. Since you're older than the original 401k owner, you definitely qualify as an "eligible designated beneficiary" under the SECURE Act exception for individuals not more than 10 years younger than the decedent. One thing that hasn't been mentioned yet - make sure when you do the rollover that it's titled correctly as an "inherited IRA" with both your name and the deceased's name (something like "Kaitlyn Otto as beneficiary of [deceased's name] IRA"). This is crucial for maintaining the tax-deferred status and ensuring you can take the stretch distributions properly. Also, since the original owner passed in 2022, you should have already started taking RMDs by December 31, 2023. If you missed that deadline, you may need to file Form 5329 to request a waiver of the 50% penalty, but the IRS has been more lenient with inherited account penalties during the transition period after the SECURE Act. I'd strongly recommend getting everything documented before you approach the financial institution, because as others have mentioned, many of them are still learning these rules themselves.

For anyone in this situation, please remember that if your income was only $14k in 2023, you were probably under the filing requirement threshold anyway! For 2023, single filers under 25 didn't need to file if they made less than $12,950.

Don't feel embarrassed at all - you're definitely not alone in this situation! I work as a tax preparer and see people in similar circumstances all the time. The good news is that with your income level of $14,000, you're almost certainly due a refund rather than owing anything. Here's what I'd recommend: First, gather your 2023 W-2 from the coffee shop (contact them if you can't find it - they're required to provide copies). Then you have a few options - you can use free tax software like the IRS Free File program, visit a VITA (Volunteer Income Tax Assistance) location for free help, or even just fill out a simple 1040 form. The key thing is that there's no penalty for filing late when you're due a refund. You have until April 15, 2027 to claim your 2023 refund, so you've got plenty of time. Once you file, you'll probably get back most or all of what was withheld from your paychecks, and you might even qualify for the Earned Income Tax Credit which could mean extra money back. You're taking the right step by asking for help - don't let tax anxiety keep you from claiming money that's rightfully yours!

Protip: Stop checking WMR its garbage. Transcripts are the source of truth for everything tax related

Just wanted to chime in as someone who went through this exact same thing last year! The 846 code is definitely what you want to see - that's the IRS saying "we're sending your money." WMR is notorious for being slow to update and honestly kind of unreliable. I've seen people get their refunds while WMR still showed "accepted" for days afterward. Trust your transcript over WMR every time!

Just wanna say that the accountant should pay for this mess if they screwed up! If they submitted incorrect forms or calculations, they should at least help fix it for free or compensate for any penalties. Accountants carry professional liability insurance for exactly this reason. Don't let them off the hook if they made a serious error that's costing your parents $135k!

This is a really complex situation, and I feel for your parents dealing with such a massive assessment. Based on what you've described, there are definitely red flags with how this was handled. The single 709 form issue you mentioned is huge - when couples elect gift splitting for life estate transfers, each spouse absolutely needs to file their own Form 709 with proper consent elections. This isn't optional. A few immediate steps I'd recommend: 1) Don't wait to respond - CP105 notices typically have 30-day deadlines 2) Get the exact language from the notice about what the IRS thinks was miscalculated 3) Gather all documentation about the original property purchase, current appraisal, and the life estate deed 4) Find out what actuarial factors and interest rates were used in the original calculation Life estate valuations are incredibly technical and use specific IRS tables that change regularly. The $220k increase in property value isn't necessarily the taxable gift amount - it depends on your parents' ages, current interest rates, and whether they properly retained life estate rights. Given the amount involved, I'd strongly suggest getting a second opinion from an estate planning attorney who specializes in gift tax, not just another accountant. This is way too much money to leave to chance, and the original accountant clearly made some serious errors.

Be careful about state taxes too! The federal capital gains rates get all the attention, but most states also tax capital gains as regular income. I got hit with a surprise state tax bill last year after focusing only on federal.

The good news is that $8,200 in profits isn't a huge amount, so even if you owe taxes, it shouldn't be overwhelming. If these were long-term gains (stocks held over a year), you might qualify for the 0% capital gains rate if your total income is under $47,025 for single filers or $94,050 for married filing jointly in 2024. One thing that hasn't been mentioned yet - make sure you're accounting for any trading fees or commissions you paid when buying and selling. These can be added to your cost basis or subtracted from your proceeds, which reduces your taxable gain. Every little bit helps! Also, if you have any losing positions still in your portfolio, you might consider tax-loss harvesting before the end of the year. You can use capital losses to offset your gains dollar-for-dollar, and if you have more losses than gains, you can deduct up to $3,000 against your ordinary income.