Can $12000 per year per child be gifted without inheritance tax even if the money comes from an IRA or 401k?

The gift giver is 67 years old with 401k and IRA. The receivers are her children. what kind of taxes can be avoided, and which still must be incurred, and at what rate then?

Thanks so much.

You will have to take a distribution from your IRA or 401k before you give it to anyone. When you take the distribution, it is taxable income to you, at your current tax rate. The fact that you are giving it to someone does not change the income tax you have to pay.

If you give $12,000 or more in one year to an individual, you will have to file a gift tax return. however, you will not owe any gift tax until your lifetime gifts as reported on your gift tax returns exceed $1 million dollars.

If you bequeath your 401k or IRA to your children, when they take distributions, they will pay income taxes at their current tax rates.