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Also, this was left in the event of his death. Why is this not considered Inheritance?

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Dondi, my condolences for your mother's loss and your own. You really NEED to consult with a financial planner/tax attorney and elder attorney. This is general question answering and NOT tax advice.
1. If your mother is receiving social security based on her own or husband's earnings, and NOT receiving any extra assistance from SSI or SSDI based on low income, the 401K should not affect what she receives as her social security check. If she is getting assistance as low income, withdrawals from the 401K will affect her benefits (extra money from social security), but how much will depend on how much she takes out from the 401K and timing.
2. The 401K effect on your mother's income (how much income tax she will owe, whether she needs to file a tax return, whether any of her social security will now be subject to income tax because she has extra income from the 401K) will be based on the withdrawals that she makes, which is why I recommend a financial planner/tax person. If your mother is receiving federal assistance or state Medicaid, the elder attorney and tax professional will be able to help coordinate the withdrawals so that you don't jeopardize benefits that your mother may already be receiving like nursing home Medicaid.
3. The money is an inheritance. BUT your brother received a tax break when he deposited money into the 401K. He didn't pay income tax on the money that was withdrawn from his check and deposited into the 401K (pre-tax). So when your mother takes the money OUT from the 401K, it's going to be taxable income just like it would have been taxable to her son when HE withdrew it from the 401K.
You really need to get your mother to see an elder attorney and tax professional with you to help make sure that she understands what is involved soon.
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