Instructions For Schedule G-1 - Tax On Lump-Sum Distributions - 2016

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2016 Instructions for Schedule G-1
Tax on Lump-Sum Distributions
General Information
Part-Year Resident Income Tax Return; or
E
When You Can Choose
Form 541, California Fiduciary Income Tax
You can file Schedule G-1 with either an
California does not impose tax on distributions
Return, to:
original tax return or an amended tax return .
from qualified retirement plans received by
y Choose the 5 .5% capital gain method by
Generally, you have 4 years from the later of
nonresidents after December 31, 1995 .
completing Part II .
the due date of your tax return or the date you
Under California and federal law, the $5,000
y Choose the 10-year averaging method by
filed your tax return to choose to use any part
employer-provided death benefit exclusion
completing Part III .
of Schedule G-1 .
was repealed . Payments received in 2016
y Figure tax using the 10-year averaging
F
Capital Gain Election
on behalf of decedents dying on or after
method, which taxes the ordinary income
August 21, 1996, do not qualify for the
part of the lump-sum distribution in the
The plan participant must have been born
exclusion .
current year as if you received it in equal
before January 2, 1936, to be eligible for
parts over 10 years .
A
Purpose
the capital gain election . Only the taxable
amount of distributions resulting from
10-Year Averaging Method & Capital Gain
If you received a qualified lump-sum
pre-1974 participation qualifies for capital gain
Election. If the participant was born before
distribution in 2016, and were born before
treatment . The amount that qualifies for capital
January 2, 1936, use Part III to choose the
January 2, 1936, you can use Schedule G-1,
gain treatment should be shown in federal
10-year averaging method to figure your tax
Tax on Lump-Sum Distributions, to figure your
Form 1099-R, box 3 . If there is an amount in
on the lump-sum distribution . You may choose
tax by special methods that may result in less
federal Form 1099-R, box 6 NUA, part of it may
this option whether or not you make the 5 .5%
tax . You pay the tax only once, for the year you
also qualify for capital gain treatment . See the
capital gain election described in General
receive the distribution, not over the next 10
NUA Worksheet in the instructions for federal
Information F, Capital Gain Election .
years . The separate tax is added to the regular
Form 4972, page 3, to figure the capital gain
Distribution Statement. The payer should
tax figured on your other income .
part of NUA . Figure the tax using 5 .5% instead
have given you federal Form 1099-R,
California law regarding the capital gain
of the 20% used for federal purposes .
Distributions From Pensions, Annuities,
election and the 10-year averaging method
If your distribution includes capital gain, you
Retirement or Profit-Sharing Plans, IRAs,
on lump-sum distributions is generally the
can either:
Insurance Contracts, etc ., or other statement
same as federal law . However, your California
that shows the separate parts of your
y Make the 5 .5% capital gain election in Part
basis in your pension plan may differ from
distribution . The amounts you will use from
II of Schedule G-1 .
your federal basis . If you received a lump-sum
federal Form 1099-R in filling out Schedule
y Treat the capital gain as ordinary income .
distribution from a Keogh plan, your California
G-1 are capital gain (box 3); ordinary income
basis includes the contributions that were not
G
Tax on Prior Year Lump-Sum
(box 2a minus box 3); total of ordinary income
deductible for California purposes because
Distributions
plus capital gain (box 2a); net unrealized
they exceeded the California deduction limit
appreciation (NUA) in employer’s securities
In some circumstances, the federal rules for
for years prior to 1987 . Get FTB Pub . 1005,
(box 6); and, if it applies, the current actuarial
multiple lump-sum distributions do not apply
Pension and Annuity Guidelines, for more
value of an annuity (box 8) and/or your
for California . Under California law, if you
information .
percentage of total distribution (box 9a) . If
received a lump-sum distribution before 1987
For federal purposes, any capital gain is
you do not have a statement that shows this
and you received a lump-sum distribution in
reduced by the amount of related estate
information, ask the payer for one that does
2016 that is the only lump-sum distribution
tax . However, California does not have a
show it .
you received after 1986, figure your tax on
comparable reduction .
D
How Often You Can Choose
the lump-sum distribution for 2016 separately
Early Distribution. If you received an early
on Schedule G -1 . Do not include the lump-
After 1986, use Schedule G-1 only once for
distribution from a qualified retirement plan,
sum distribution you received before 1987 on
each plan participant . If you receive more
you may have to pay an additional 2½%
Schedule G-1 .
than one lump-sum distribution for the same
tax, unless the distribution meets one of the
plan participant in one tax year, treat all of the
exceptions . Get form FTB 3805P, Additional
Specific Line Instructions
distributions in the same way . Combine the
Taxes on Qualified Plans (Including IRAs)
distributions on a single Schedule G-1 .
and Other Tax-Favored Accounts, for more
If you received more than one qualified
information .
If you make an election as a beneficiary of a
distribution for the same plan participant, add
deceased participant, it does not affect any
them and figure the tax on the total amount .
B
Who Can Use the Form
election you can make for qualified lump-sum
If you and your spouse/RDP file a joint tax
If you received a qualified lump-sum
distributions from your own plan . You can also
return and each has received a lump-sum
distribution and were born before
make a separate election as the beneficiary of
distribution, complete and file a separate
January 2, 1936, you can use Schedule G-1 .
more than one qualifying person .
Schedule G-1 for each spouse’s/RDP’s election
If you received a qualifying distribution as
Example: Your mother and father died and
and combine the tax on Form 540, line 34 or
a beneficiary after a participant’s death,
each was born before January 2, 1936 . Each
Long Form 540NR, line 41 .
the deceased must have been born before
participated in a qualified plan of which you are
January 2, 1936, for you to use this form for
Part II
the beneficiary . You also received a qualified
that distribution .
lump-sum distribution from your own plan
Line 6
To determine if the distribution qualifies, see
and you were born before January 2, 1936 .
Enter zero (-0-) and go to Part III if your
the instructions for federal Form 4972, Tax on
You may make a separate election for each
distribution does not include capital gain, or
Lump-Sum Distributions .
of the distributions; one for yourself, one as
if you are not making the 5 .5% capital gain
your mother’s beneficiary, and one as your
C
How to Use the Form
election .
father’s beneficiary . It does not matter if the
If you make the 5 .5% capital gain election but
Use Schedule G-1 with Form 540, California
distributions all occur in the same year or in
do not take a death benefit exclusion, enter
Resident Income Tax Return; Long
different years . File a separate Schedule G-1 for
on line 6 the entire capital gain amount from
Form 540NR, California Nonresident or
each participant’s distribution .
federal Form 1099-R, box 3 .
Page 1 Schedule G-1 Instructions 2016

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