USA 401K Withdrawal and tax ramifications

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Hello. My mother-in-law is 66 and retired last year. She lives in California and collects social security and also collects income by renting out her house. She's going to withdraw $325K from her retirement 401K and "gifting" it me and my wife for a down payment on a new house we purchased.

We understand the $325K withdrawal will be taxed as if it were income. When she initiates the withdrawal, can she pay the state and federal taxes at the time of withdrawal, similar to how we're taxed when we get paid from our employer? If not, how does this work?

Any advice on how to go about this? Thank you, Billy
 

Drmdcpa

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The 401k manager will ask her how she wants taxes withheld or at least they should.

She is also going to have a gift tax return filing requirement.

What part of CA are you at?
 
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The 401k manager will ask her how she wants taxes withheld or at least they should.

She is also going to have a gift tax return filing requirement.

What part of CA are you at?
Hi, we're in San Jose. Thanks for your feedback.
 

Drmdcpa

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My office is in Oakland if you need further assistance
 

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