There are many investors that place investments into mutual funds throughout their lives and heirs inheriting these funds will face tax implications. This article explains the basis step-up rule for inherited mutual funds. There are different rules that apply to mutual funds held in retirement accounts. Assets that exist in a retirement account or regular taxable accounts are generally included in the estate and subject to any estate taxes that might apply. Estate taxes are typically paid by the estate and the funds are usually taken out before any inheritance is received by the beneficiary. There is a little known “Social Security secrets” that involves a $15,978 Social Security bonus that many retirees make the mistake of overlooking.
See Taxes on Inherited Mutual Funds, The Motley Fool, January 5, 2016.
