Fillable Form 4972 - Tax On Lump-Sum Distributions

Page

Form 4972 (2015)

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

shared the distribution only with other

before 1987 does not prevent

• If you are not making the capital gain

trusts, figure the tax on the total lump sum

you from making an election for

election, add the amount from Form

first. The trusts then share the tax in the

a distribution after 1986 for the

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

same proportion that they shared the

same participant, provided the participant

Divide the result by your percentage of

distribution.

was under age 59½ at the time of the

distribution from Form 1099-R, box 9a.

If you shared in a lump-sum distribution

Enter the result on Form 4972, line 8. On

pre-1987 distribution.

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 have 3

follows.

• If you are making the capital gain

years from the later of the due date of your

Step 1. Complete Form 4972, Parts I and

election, subtract the amount from Form

tax return or the date you filed your return

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

II. If you make the 20% capital gain

to use any part of Form 4972.

election in Part II and also elect to include

Add to the result the amount from line F of

Capital Gain Election

NUA in taxable income, complete the NUA

your NUA Worksheet. Then, divide the total

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 do not

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 do not have NUA.

qualifies for capital gain treatment. The

• Complete Form 4972, lines 9 and 10.

capital gain amount should be shown in

• If you are not making the capital gain

Divide the amount from Form 1099-R, box

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

election, divide the amount from Form

8, by the percentage in box 8. Enter the

unrealized appreciation (NUA) amount in

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

result on Form 4972, line 11.

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

distribution in box 9a. Enter this amount on

qualify for capital gain treatment. Use the

Form 4972, line 8.

Step 4. Complete Form 4972 through

NUA Worksheet on this page to figure the

line 28.

• If you are making the capital gain

capital gain part of NUA if you make the

election, subtract the amount from Form

Step 5. Complete the following

election to include NUA in your taxable

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

worksheet to figure the entry for Form

income.

Divide the result by your percentage of

4972, line 29.

You can report the ordinary income

distribution from Form 1099-R, box 9a.

A. Subtract line 28 from line 25

portion of the distribution on Form 1040,

Enter the result on Form 4972, line 8.

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

• Complete Form 4972, lines 9 and 10.

B. Enter your percentage of the

1041, line 8 or you can figure the tax using

Divide the amount from Form 1099-R, box

distribution from box 9a

the 10-year tax option. The ordinary

8, by the percentage in box 8. Enter the

C. Multiply line A by line B. Enter

income portion is generally the amount

result on Form 4972, line 11. Then, skip

here and on Form 4972, line 29.

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

Step 3 and go to Step 4.

Also, write “MRD” on the dotted

amount from box 3 of that form.

line next to line 29 .

Net unrealized appreciation (NUA).

Normally, NUA in employer securities

received as part of a lump-sum distribution

NUA Worksheet (keep for your records)

is not taxable until the securities are sold.

However, you can elect to include NUA in

Enter the amount from Form 1099-R, box 3

taxable income in the year received.

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

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.

Part of the amount in box 6 will qualify for

least three places)

capital gain treatment if there is an amount

Enter the amount from Form 1099-R, box 6

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

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

amount subject to capital gain treatment

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

including the NUA, complete the NUA

Worksheet on this page.

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

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

Specific Instructions

“NUA” and the amount from line E above .

Name of recipient of distribution and

identifying number. At the top of Form

Death Benefit Worksheet (keep for your records)

4972, fill in the name and identifying

number of the recipient of the distribution.

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

If you received more than one qualified

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

distribution in 2015 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

distributions in 2015 for more than one

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

participant, file a separate Form 4972 for

least three places)

the distributions of each participant.

Enter your share of the death benefit exclusion* .

If you and your spouse are filing a joint

return and each has received a lump-sum

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

distribution, complete and file a separate

line C

Form 4972 for each spouse, combine the

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

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,

total on Form 1040, line 44.

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

share the distribution.

Form 4972 - Tax On Lump-Sum Distributions - 2015 Page 3

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