1997 Tax Help Archives  

Five or Ten - Year Tax Options for Lump-Sum Distributions

This is archived information that pertains only to the 1997 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Special tax computations are allowed for qualifying recipients of certain lump-sum distributions from retirement plans. This is known as a five-year or ten-year tax option. Lump-sum distributions must meet specific requirements to qualify for optional tax treatment.

The election to use either option can be made only once after 1986 by a participant born before 1936. However, beginning in 1995, a participant born after 1935, who has reached age 59-1/2 at the time the distribution is made, may be able to use the 5-year tax option.

Form 4972 is used to compute the tax on a lump-sum distribution. Its instructions contain detailed information. See Topic 412 which discusses lump sum distributions. Additional material can be found in Publication 575, Pension and Annuity Income. Both can be ordered by calling 1-800-829-3676.

Tax Topics & FAQs | Tax Help Archives | Home