IRAs and 401ks weren't even invented until after I graduated so I never was taught about their tax ramifications. But I certainly hope that they're not counted as part of the estate for inheritance tax purposes and then also taxed as ordinary income to the beneficiary.
They are. That's exactly what happened to my uncle's estate. When he died it was before the rise in the estate tax cut-off, so the estate was hit by that. Plus, it was plundered by the state of CA. Then, there was the distribution... Oh, and since the estate was in CA, CA figured that the distribution was taxable in CA as well, so the family members had to pay CA state income tax, as well as federal and state taxes where they were residents (although the CA state tax was deductable).
Mark