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Anna Colley

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  1. My mother had a 457 plan as a state of Georgia employee. She died in 2005. She was on disability retirement when she died and was 59 1/2 plus. She was not drawing on the account. I thought that all three of us (my brothers and I) were named as beneficiaries. After over a year of wrangling with the organization that administers the plan, they finally completed the process of closing out her account by putting the account in my name. She did not have a will and I am the administrator of the estate. 1) Was the account put solely in my name because I am the administrator of the estate? I thought assets with specific beneficiaries named automatically went to the beneficiaries. Her life insurance was automatically paid out three ways. 2) My husband and I paid for funeral expenses and legal expenses on the estate out of pocket. If I cash out the account to reimburse myself (the account is only $5300), will the tax liability be solely on my husband and I? 3) I understand that 20% will be withheld if the account is distributed and that as a beneficiary I am not liable for the 10% penalty due to age. Will the 20% totally satisfy the tax liability for the account? Or is it added into my income for the year and then taxed that way? Or is it somehow taxed as part of the estate? Ideally I would like to cash out the account, pay myself and my husband back for expenses of administering the estate, and then distribute whatever remains three ways between my brothers and myself. I am just trying to be careful because I know this is sticky tax-wise. I have read the related document on the IRS website and the tax document for the plan, but it was all pretty vague and convoluted. I don't want to get a bum deal come tax time next year. Thanks for any help that anyone can offer. Anna
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