Publication 575 - Pension And Annuity Income - 2002 Page 26
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34•
he did not roll over includes part of the loss from the stock
The nontaxability of any part of the distribution that
sale. Paul reports $3,750 ($10,000/$40,000 × $15,000)
you roll over within 60 days after you receive the
capital loss and $18,750 ($50,000/$40,000 × $15,000)
distribution.
ordinary income.
•
Other qualified retirement plan rules that apply, in-
Property and cash distributed. If both cash and property
cluding those for lump-sum distributions, alternate
were distributed and you did not roll over the entire distri-
payees, and cash or deferred arrangements.
bution, you may designate what part of the rollover is
•
How the distribution rules of the plan to which you
allocable to the cash distribution and what part is allocable
roll over the distribution may differ from the rules that
to the proceeds from the sale of the distributed property. If
apply to the plan making the distribution in their
the distribution included an amount that is not taxable
restrictions and tax consequences.
(other than the net unrealized appreciation in employer
securities) as well as an eligible rollover distribution, you
Reasonable period of time. The plan administrator
may also designate what part of the nontaxable amount is
must provide you with a written explanation no earlier than
allocable to the cash distribution and what part is allocable
to the property. Your designation must be made by the due
90 days and no later than 30 days before the distribution is
date for filing your tax return, including extensions. You
made. However, you can choose to have a distribution
cannot change your designation after that date. If you do
made less than 30 days after the explanation is provided
not make a designation on time, the rollover amount or the
as long as the following two requirements are met.
nontaxable amount must be allocated on a ratable basis.
•
You must have the opportunity to consider whether
Qualified domestic relations order (QDRO). You may
or not you want to make a direct rollover for at least
be able to roll over tax free all or part of a distribution from a
30 days after the explanation is provided.
qualified retirement plan that you receive under a QDRO.
•
The information you receive must clearly state that
(See Qualified domestic relations order (QDRO) under
General Information, earlier.) If you receive the distribution
you have the right to have 30 days to make a deci-
as an employee’s spouse or former spouse (not as a
sion.
nonspousal beneficiary), the rollover rules apply to you as
Contact the plan administrator if you have any questions
if you were the employee.
regarding this information.
Rollover by surviving spouse. You may be able to roll
over tax free all or part of a distribution from a qualified
Choosing the right option. Table 1 may help you decide
retirement plan you receive as the surviving spouse of a
which distribution option to choose. Carefully compare the
deceased employee. The rollover rules apply to you as if
effects of each option.
you were the employee. You can roll over the distribution
into a qualified retirement plan or a traditional IRA.
Table 1. Comparison of Payment to You
A distribution paid to a beneficiary other than the
Versus Direct Rollover
employee’s surviving spouse is not an eligible rollover
distribution.
Affected item
Result of a
Result of a
payment to you direct rollover
How to report. Enter the total distribution (before income
tax or other deductions were withheld) on line 16a of Form
The payer must
There is no
Withholding
withhold 20% of
1040 or line 12a of Form 1040A. This amount should be
withholding.
the taxable part.
shown in box 1 of Form 1099 – R. From this amount,
subtract any contributions (usually shown in box 5 of Form
If you are under
1099 – R) that were taxable to you when made. From that
age 59
1
/
, a 10%
2
result, subtract the amount that was rolled over either
additional tax
There is no 10%
directly or within 60 days of receiving the distribution. Enter
may apply to the
additional tax.
the remaining amount, even if zero, on line 16b of Form
taxable part
Additional tax
See Tax on Early
1040 or line 12b of Form 1040A. Also, write ‘‘Rollover’’ next
(including an
Distributions,
to line 16b on Form 1040 or line 12b of Form 1040A.
amount equal to
later.
the tax withheld)
Written explanation to recipients. The administrator of
that is not rolled
a qualified retirement plan must, within a reasonable pe-
over.
riod of time before making an eligible rollover distribution,
Any taxable part
provide you with a written explanation. It must tell you
(including the
Any taxable part
about all of the following.
taxable part of
is not income to
•
Your right to have the distribution paid tax free di-
When to report any amount
you until later
rectly to another qualified retirement plan or to a
as income
withheld) not
distributed to you
traditional IRA.
rolled over is
from the new plan
income to you in or IRA.
•
The requirement to withhold tax from the distribution
the year paid.
if it is not directly rolled over.
Page 26
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