Fillable Form 4972 - Tax On Lump-Sum Distributions

Page

Form 4972 (2017)

An earlier election on Form 4972

Multiple recipients of a lump-sum

Step 3. Use this step only if you elect to

or Form 5544 for a distribution

distribution. If you are filing for a trust that

include NUA in your taxable income.

TIP

before 1987 doesn't prevent you

shared the distribution only with other

• If you aren't making the capital gain

from making an election for a

trusts, figure the tax on the total lump sum

election, add the amount from Form

distribution after 1986 for the

first. The trusts then share the tax in the

1099-R, box 2a, to the amount in box 6.

same participant, provided the participant

same proportion that they shared the

Divide the result by your percentage of

was under age 59½ at the time of the

distribution.

distribution from Form 1099-R, box 9a.

pre-1987 distribution.

If you shared in a lump-sum distribution

Enter the result on Form 4972, line 8. On

from a qualified retirement plan when not

the dotted line next to line 8, write “NUA”

When To File Form 4972

all recipients were trusts (a percentage will

and the amount of NUA included (Form

You can file Form 4972 with either an

1099-R, box 6, divided by your percentage

be shown in Form 1099-R, boxes 8 and/or

original or amended return. For an

of distribution in box 9a).

9a), figure your tax on Form 4972 as

amended return, you generally must file

follows.

• If you are making the capital gain

within 3 years after the date the original

Step 1. Complete Form 4972, Parts I and

election, subtract the amount from Form

return was filed or within 2 years after the

1099-R, box 3, from the amount in box 2a.

II. If you make the 20% capital gain

date the tax was paid, whichever is later, to

election in Part II and also elect to include

Add to the result the amount from line F of

use any part of Form 4972.

NUA in taxable income, complete the NUA

your NUA Worksheet. Then, divide the total

Capital Gain Election

Worksheet below to determine the amount

by your percentage of distribution from

If the distribution includes a capital gain

of NUA that qualifies for capital gain

Form 1099-R, box 9a. Enter the result on

amount, you can (a) make the 20% capital

treatment. Then, skip Step 2 and go to

Form 4972, line 8. On the dotted line next

gain election in Part II of Form 4972, or (b)

Step 3.

to line 8, write “NUA” and the amount of

treat the capital gain as ordinary income.

NUA included (line F of your NUA

Step 2. Use this step only if you don't

Only the taxable amount of distributions

Worksheet divided by your percentage of

elect to include NUA in your taxable

resulting from pre-1974 participation

distribution from Form 1099-R, box 9a).

income or if you don't have NUA.

qualifies for capital gain treatment. The

• Complete Form 4972, lines 9 and 10.

• If you aren't making the capital gain

capital gain amount should be shown in

Divide the amount from Form 1099-R, box

election, divide the amount from Form

Form 1099-R, box 3. If there is a net

8, by the percentage in box 8. Enter the

1099-R, box 2a, by your percentage of

unrealized appreciation (NUA) amount in

result on Form 4972, line 11.

distribution in box 9a. Enter this amount on

Form 1099-R, box 6, part of it will also

Form 4972, line 8.

Step 4. Complete Form 4972 through

qualify for capital gain treatment. Use the

line 28.

• If you are making the capital gain

NUA Worksheet on this page to figure the

election, subtract the amount from Form

Step 5. Complete the following

capital gain part of NUA if you make the

1099-R, box 3, from the amount in box 2a.

worksheet to figure the entry for Form

election to include NUA in your taxable

Divide the result by your percentage of

4972, line 29.

income.

distribution from Form 1099-R, box 9a.

You can report the ordinary income

A. Subtract line 28 from line 25

Enter the result on Form 4972, line 8.

portion of the distribution on Form 1040,

• Complete Form 4972, lines 9 and 10.

B. Enter your percentage of the

line 16b; Form 1040NR, line 17b; or Form

Divide the amount from Form 1099-R, box

distribution from box 9a

1041, line 8; or you can figure the tax using

8, by the percentage in box 8. Enter the

C. Multiply line A by line B. Enter

the 10-year tax option. The ordinary

result on Form 4972, line 11. Then, skip

here and on Form 4972, line 29.

income portion is generally the amount

Step 3 and go to Step 4.

Also, write “MRD” on the dotted

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

line next to line 29 .

amount from box 3 of that form.

Net unrealized appreciation (NUA).

Normally, NUA in employer securities

NUA Worksheet (keep for your records)

received as part of a lump-sum distribution

isn't taxable until the securities are sold.

Enter the amount from Form 1099-R, box 3

However, you can elect to include NUA in

Enter the amount from Form 1099-R, box 2a .

taxable income in the year received.

The total amount to report as NUA

Divide line A by line B and enter the result as a decimal (rounded to at

should be shown in Form 1099-R, box 6.

least three places)

Part of the amount in box 6 will qualify for

Enter the amount from Form 1099-R, box 6

capital gain treatment if there is an amount

Capital gain portion of NUA. Multiply line C by line D

in Form 1099-R, box 3. To figure the total

amount subject to capital gain treatment

Ordinary income portion of NUA. Subtract line E from line D

including the NUA, complete the NUA

Total capital gain portion of distribution. Add lines A and E. Enter here

Worksheet on this page.

and on Form 4972, line 6. On the dotted line next to line 6, write

“NUA” and the amount from line E above .

Specific Instructions

Name of recipient of distribution and

Death Benefit Worksheet (keep for your records)

identifying number. At the top of Form

4972, fill in the name and identifying

Enter the amount from Form 1099-R, box 3, or, if you are including

number of the recipient of the distribution.

NUA in taxable income, the amount from line G of the NUA Worksheet

If you received more than one qualified

distribution in 2017 for the same plan

Enter the amount from Form 1099-R, box 2a, plus, if you are including

participant, add them and figure the tax on

NUA in taxable income, the amount from Form 1099-R, box 6 .

the total amount. If you received qualified

Divide line A by line B and enter the result as a decimal (rounded to at

distributions in 2017 for more than one

least three places)

participant, file a separate Form 4972 for

the distributions of each participant.

Enter your share of the death benefit exclusion* .

If you and your spouse are filing a joint

Death benefit exclusion allocated to capital gain. Multiply line D by

return and each has received a lump-sum

line C

distribution, complete and file a separate

Subtract line E from line A. Enter here and on Form 4972, line 6

Form 4972 for each spouse, combine the

tax, and include the combined tax in the

*Applies only for participants who died before August 21, 1996. If there are multiple recipients of the distribution,

the allowable death benefit exclusion must be allocated among the recipients in the same proportion that they

total on Form 1040, line 44.

share the distribution.

Form 4972 - Tax On Lump-Sum Distributions - 2017 Page 3

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