Fillable Form 4972 - Tax On Lump-Sum Distributions

Page

Form 4972 (2015)

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 do not use Form 4972, and you

legislation enacted after they were

with the lump sum.

file:

published, go to

• A distribution made during the first 5 tax

a. Form 1040. Report the entire amount

years that the participant was in the plan,

from box 1 (Gross distribution) of Form

General Instructions

unless it was paid because the participant

1099-R on line 16a, and the taxable

died.

amount on line 16b. If your pension or

Purpose of Form

annuity is fully taxable, enter the amount

• The current actuarial value of any annuity

Use Form 4972 to figure the tax on a

from box 2a (Taxable amount) of Form

contract included in the lump sum (Form

qualified lump-sum distribution (defined

1099-R on line 16b; do not make an entry

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

below) you received in 2015 using the 20%

on line 16a.

which you use only to figure tax on the

capital gain election, the 10-year tax

ordinary income part of the distribution).

b. Form 1040NR. Report the entire

option, or both. These are special formulas

amount from box 1 (Gross distribution) of

• A distribution to a 5% owner that is subject

used to figure a separate tax on the

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

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

distribution that may result in a smaller tax

amount on line 17b. If your pension or

• A distribution from an IRA.

than if you reported the taxable amount of

annuity is fully taxable, enter the amount

• A distribution from a tax-sheltered

the distribution as ordinary income.

from box 2a (Taxable amount) of Form

annuity (section 403(b) plan).

You pay the tax only once, for the year

1099-R on line 17b; do not make an entry

• A distribution of the redemption proceeds

you receive the distribution, not over the

on line 17a.

of bonds rolled over tax free to a qualified

next 10 years. The separate tax is added to

c. Form 1041. Report the amount on

pension plan, etc., from a qualified bond

the regular tax figured on your other

line 8.

purchase plan.

income.

2. If you do not use Part III of Form 4972,

• A distribution from a qualified plan if the

Related Publications

but use Part II, report only the ordinary

participant or his or her surviving spouse

income portion of the distribution on Form

For more information related to this topic

previously received an eligible rollover

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

see the following publications.

distribution from the same plan (or another

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

• Publication 575, Pension and Annuity

plan of the employer that must be

The ordinary income portion is the amount

Income.

combined with that plan for the lump-sum

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

• Publication 721, Tax Guide to U.S. Civil

distribution rules) and the previous

amount from box 3 of that form.

Retirement Benefits.

distribution was rolled over tax free to

3. If you use Part III of Form 4972, do not

another qualified plan or an IRA.

• Publication 939, General Rule for

include any part of the distribution on Form

Pensions and Annuities.

• A distribution from a qualified plan that

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

received a rollover after 2001 from an IRA

What Is a Qualified Lump-Sum

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

(other than a conduit IRA), a governmental

Distribution?

The entries in other boxes on Form

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

1099-R may also apply in completing

It is the distribution or payment in one tax

sheltered annuity on behalf of the plan

Form 4972.

year of a plan participant’s entire balance

participant.

• Box 6 (Net unrealized appreciation in

from all of an employer’s qualified plans of

• A distribution from a qualified plan that

employer’s securities). See Net unrealized

one kind (for example, pension, profit-

received a rollover after 2001 from another

appreciation (NUA), later.

sharing, or stock bonus plans) in which the

qualified plan on behalf of that plan

participant had funds. The participant’s

• Box 8 (Other). Current actuarial value of

participant’s surviving spouse.

entire balance does not include deductible

an annuity.

• A corrective distribution of excess

voluntary employee contributions or certain

deferrals, excess contributions, excess

How Often You Can Use Form 4972

forfeited amounts. The participant must

aggregate contributions, or excess annual

After 1986, you can use Form 4972 only

have been born before January 2, 1936.

additions.

once for each plan participant. If you

Distributions upon death of the plan

• A lump-sum credit or payment under the

receive more than one lump-sum

participant. If you received a qualified

alternative annuity option from the Federal

distribution for the same participant in 1 tax

distribution as a beneficiary after the

Civil Service Retirement System (or the

year, you must treat all those distributions

participant’s death, the participant must

Federal Employees’ Retirement System).

the same way. Combine them on a single

have been born before January 2, 1936, for

Form 4972.

How To Report the Distribution

you to use this form for that distribution.

If you make an election as a beneficiary

If you can use Form 4972, attach it to Form

Distributions to alternate payees. If you

of a deceased participant, it does not affect

1040 (individuals), Form 1040NR

are the spouse or former spouse of a plan

any election you can make for qualified

(nonresident aliens), or Form 1041 (estates

participant who was born before January 2,

lump-sum distributions from your own

or trusts). The payer should have given you

1936, and you received a qualified lump-

plan. You can also make an election as the

a Form 1099-R or other statement that

sum distribution as an alternate payee

beneficiary of more than one qualifying

shows the amounts needed to complete

under a qualified domestic relations order,

person.

Form 4972. The following choices are

you can use Form 4972 to figure the tax on

Example. Your mother and father died

available.

the distribution using the 20% capital gain

and each was born before January 2, 1936.

20% capital gain election. If there is an

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

Each had a qualified plan of which you are

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

For details, see Pub. 575.

the beneficiary. You also received a

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

Distributions That Do Not Qualify for

qualified lump-sum distribution from your

rate to the capital gain portion. See Capital

the 20% Capital Gain Election or the

own plan and you were born before

Gain Election, later.

10-Year Tax Option

January 2, 1936. You can make an election

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

for each of the distributions; one for

The following distributions are not qualified

figure your tax on the lump-sum distribution

yourself, one as your mother’s beneficiary,

lump-sum distributions and do not qualify

using the 10-year tax option whether or not

and one as your father’s beneficiary. It

for the 20% capital gain election or the

you make the 20% capital gain election.

does not matter if the distributions all occur

10-year tax option.

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

in the same year or in different years. File a

• The part of a distribution not rolled over if

is blank, you must figure the taxable

separate Form 4972 for each participant’s

the distribution is partially rolled over to

amount to complete Form 4972. For

distribution.

another qualified plan or an IRA.

details, see Pub. 575.

Form 4972 - Tax On Lump-Sum Distributions - 2015 Page 2

Related Articles

Related forms

Related Categories