How to Split Proceeds from a 401K Plan?

As a general rule the life insurance proceeds are not taxed at the federal level in the US. The amount though is included in computing the value of the estate for tax purposes. Most life insurance policies pay in a lump sum.

As for splitting the proceeds with your brother, you should be able to do this. When my parents passed and the proceeds were to be distributed equally among the 4 siblings, I chose to forgo my share without any problems

You need to hire a competent tax attorney or accountant to structure the distribution the way you want, if possible, and coordinate it with the executor. Miss one dotted "I" or forget to cross one "T" and you could jeopardize any tax savings.

Good luck.

First, the 401k was never taxed & will be when money is withdrawn. As a nephew, you are a Class D beneficiary as is your brother & would pay taxes. Each state varies with estate laws & taxes, 17 states still have an estate tax. The life insurance is not taxable to you but will be to your brother.

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