This link gives a nice visual map regarding inheritance and estate tax.
http://taxfoundation.org/blog/does-your-state-have-estate-or-inheritance-tax
Re: fellowship taxes. I phrased that poorly. It is taxed but taxes are not pulled automatically. I have to reconcile at the end of the year.
I read the link posted in #7 by @mcat2 but I don’t quite understand. Does it imply that in order to lower tax liability, the beneficiary of 401K and IRA funds should be a trust, not individuals?
No because 401k and IRA accounts are pretax so you have to pay tax eventually., there is no free lunch.
Not all 401k and IRA are pretax.
I am so lost.
No taxes for me. Got it.
The rest of it is woosh over my head.
There was a comment that you may be expected to pay estimated taxes on your fellowship, not just reconcile at the end of the year. You might want to follow up on that comment…
Madison if they are not pretax, they should be prefaced with the word Roth, like Roth 401K or Roth IRA to avoid confusion. Some people do commingle them but it will be separate by the administrators of such plans.
A non deductible IRA is not a Roth IRA and could be partially taxable/partially non-taxable.
You can contribute after Tax money to a regular IRA
(Xposted with Madison85)
But they are prefaced with the term non-deductible IRA. And it’s a tax hell to commingle them with deductible IRA.
Re: estimated taxes. That will be something that starts next year. Our first fellowship check came after the start of the last quarter.