What is the primary tax implication for Mary inheriting from a retirement fund?

When Mary inherits from a retirement fund, the primary tax implication includes her being liable for both income and inheritance tax. Retirement funds typically consist of pre-tax contributions and the growth in these funds is also tax-deferred. However, when an individual inherits such a fund, they often have to pay income tax on withdrawals, as the money is treated as taxable income. Additionally, depending on the jurisdiction and the size of the estate, there may also be inheritance tax that applies.

This dual liability emphasizes the importance for inheritors to understand the tax landscape surrounding inherited retirement funds. It’s crucial for Mary to consult a tax advisor or financial planner to navigate these potential liabilities effectively, ensuring she is prepared for any tax payments due upon withdrawal and aware of the implications of the inheritance tax as well.