"I read the document listed but am confused. Yes it will be taxed if we remove the funds, but does age matter on tax rate or what is taxed ( not income- do not presume we'll have less taxable income in future)" I appreciate your advice to check with a fee-based adviser, but living in a small town in a state where corruption rules, we have yet to find trust worthy, competent counsel. Those that fit that criteria serve the rich and powerful and have no time for small questions. Hence we are asking in a more global community where hopefully knowledge without ulterior motive resides.
My mother in law passed last September and left a 403b with my husband as beneficiary. She was 84 and my husband is 56. The fund is oppenheimer and has lost 10,000 since her death. We are in a very low tax bracket, the lowest and would like help understanding the tax implications if we just cash out now and what should have been done at the time of her death. Am I correct in understanding that if she died in 2007 it became ours in 2007 and do we have to report this on 2007 tax return? I read the document listed but am confused. Yes it will be taxed if we remove the funds, but does age matter on tax rate or what is taxed ( not income- do not presume we'll have less taxable income in future) I'd like to invest in my husband and allow him to be able to take a teaching gig that will pay almost nothing but will position him for future jobs and income. Cashing out the 403b would help make this a possibility. Your input? Thanks in advance.