Fillable Form 4972 - Tax On Lump-Sum Distributions

Page

Form 4972 (2017)

Section references are to the Internal

• Any distribution if an earlier election to

Where to report. Report amounts from

Revenue Code.

use either the 5- or 10-year tax option had

your Form 1099-R either directly on your

been made after 1986 for the same plan

tax return (Form 1040, 1040NR, or 1041) or

Future developments. For the latest

participant.

on Form 4972.

information about developments related to

Form 4972 and its instructions, such as

• U.S. Retirement Plan Bonds distributed

1. If you don't use Form 4972, and you file:

legislation enacted after they were

with the lump sum.

a. Form 1040. Report the entire amount

published, go to

• A distribution made during the first 5 tax

from box 1 (Gross distribution) of Form

years that the participant was in the plan,

1099-R on line 16a, and the taxable

General Instructions

unless it was made because the participant

amount on line 16b. If your pension or

died.

annuity is fully taxable, enter the amount

Purpose of Form

from box 2a (Taxable amount) of Form

• The current actuarial value of any annuity

Use Form 4972 to figure the tax on a

1099-R on line 16b; don't make an entry on

contract included in the lump sum (Form

qualified lump-sum distribution (defined

line 16a.

1099-R, box 8, should show this amount,

below) you received in 2017 using the 20%

which you use only to figure tax on the

b. Form 1040NR. Report the entire

capital gain election, the 10-year tax

ordinary income part of the distribution).

amount from box 1 (Gross distribution) of

option, or both. These are special formulas

Form 1099-R on line 17a, and the taxable

• A distribution to a 5% owner that is subject

used to figure a separate tax on the

amount on line 17b. If your pension or

to penalties under section 72(m)(5)(A).

distribution that may result in a smaller tax

annuity is fully taxable, enter the amount

• A distribution from an IRA.

than if you reported the taxable amount of

from box 2a (Taxable amount) of Form

• A distribution from a tax-sheltered

the distribution as ordinary income.

1099-R on line 17b; don't make an entry on

annuity (section 403(b) plan).

You pay the tax only once, for the year

line 17a.

• A distribution of the redemption proceeds

you receive the distribution, not over the

c. Form 1041. Report the amount on

of bonds rolled over tax free to a qualified

next 10 years. The separate tax is added to

line 8.

pension plan, etc., from a qualified bond

the regular tax figured on your other

2. If you don't use Part III of Form 4972,

purchase plan.

income.

but use Part II, report only the ordinary

• A distribution from a qualified plan if the

Related Publications

income portion of the distribution on Form

participant or his or her surviving spouse

1040, lines 16a and 16b; on Form 1040NR,

For more information related to this topic,

previously received an eligible rollover

lines 17a and 17b; or on Form 1041, line 8.

see the following publications.

distribution from the same plan (or another

The ordinary income portion is the amount

• Pub. 575, Pension and Annuity Income.

plan of the employer that must be

from box 2a of Form 1099-R, minus the

• Pub. 721, Tax Guide to U.S. Civil Service

combined with that plan for the lump-sum

amount from box 3 of that form.

Retirement Benefits.

distribution rules) and the previous

3. If you use Part III of Form 4972, don't

distribution was rolled over tax free to

• Pub. 939, General Rule for Pensions and

include any part of the distribution on Form

another qualified plan or an IRA.

Annuities.

1040, lines 16a and 16b; on Form 1040NR,

• A distribution from a qualified plan that

What Is a Qualified Lump-Sum

lines 17a and 17b; or on Form 1041, line 8.

received a rollover after 2001 from an IRA

Distribution?

The entries in other boxes on Form

(other than a conduit IRA), a governmental

1099-R may also apply in completing

It is the distribution or payment in one tax

section 457(b) plan, or a section 403(b) tax-

Form 4972.

year of a plan participant's entire balance

sheltered annuity on behalf of the plan

• Box 6 (Net unrealized appreciation in

from all of an employer's qualified plans of

participant.

employer's securities). See Net unrealized

one kind (for example, pension, profit-

• A distribution from a qualified plan that

appreciation (NUA), later.

sharing, or stock bonus plans) in which the

received a rollover after 2001 from another

participant had funds. The participant’s

• Box 8 (Other). Current actuarial value of

qualified plan on behalf of that plan

entire balance doesn't include deductible

an annuity.

participant's surviving spouse.

voluntary employee contributions or certain

• A corrective distribution of excess

How Often You Can Use Form 4972

forfeited amounts. The participant must

deferrals, excess contributions, excess

After 1986, you can use Form 4972 only

have been born before January 2, 1936.

aggregate contributions, or excess annual

once for each plan participant. If you

Distributions upon death of the plan

additions.

receive more than one lump-sum

participant. If you received a qualified

• A lump-sum credit or payment under the

distribution for the same participant in 1 tax

distribution as a beneficiary after the

alternative annuity option from the Federal

year, you must treat all those distributions

participant's death, the participant must

Civil Service Retirement System (or the

the same way. Combine them on a single

have been born before January 2, 1936, for

Federal Employees' Retirement System).

Form 4972.

you to use this form for that distribution.

If you make an election as a beneficiary

How To Report the Distribution

Distributions to alternate payees. If you

of a deceased participant, it doesn't affect

If you can use Form 4972, attach it to Form

are the spouse or former spouse of a plan

any election you can make for qualified

1040 (individuals), Form 1040NR

participant who was born before January 2,

lump-sum distributions from your own

(nonresident aliens), or Form 1041 (estates

1936, and you received a qualified lump-

plan. You can also make an election as the

or trusts). The payer should have given you

sum distribution as an alternate payee

beneficiary of more than one qualifying

a Form 1099-R or other statement that

under a qualified domestic relations order,

person.

shows the amounts needed to complete

you can use Form 4972 to figure the tax on

Example. Your mother and father died

Form 4972. The following choices are

the distribution using the 20% capital gain

and each was born before January 2, 1936.

available.

election, the 10-year tax option, or both.

Each had a qualified plan of which you are

20% capital gain election. If there is an

For details, see Pub. 575.

the beneficiary. You also received a

amount in Form 1099-R, box 3, you can

Distributions That Don't Qualify for the

qualified lump-sum distribution from your

use Form 4972, Part II, to apply a 20% tax

20% Capital Gain Election or the 10-

own plan and you were born before

rate to the capital gain portion. See Capital

Year Tax Option

January 2, 1936. You can make an election

Gain Election, later.

for each of the distributions: one for

The following distributions aren't qualified

10-year tax option. You can use Part III to

yourself, one as your mother's beneficiary,

lump-sum distributions and don't qualify

figure your tax on the lump-sum distribution

and one as your father's beneficiary. It

for the 20% capital gain election or the

using the 10-year tax option whether or not

doesn't matter if the distributions all occur

10-year tax option.

you make the 20% capital gain election.

in the same year or in different years. File a

• The part of a distribution not rolled over if

Taxable amount. If Form 1099-R, box 2a,

separate Form 4972 for each participant's

the distribution is partially rolled over to

is blank, you must figure the taxable

distribution.

another qualified plan or an IRA.

amount to complete Form 4972. For

details, see Pub. 575.

Form 4972 - Tax On Lump-Sum Distributions - 2017 Page 2

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