California Schedule G-1 - Tax On Lump-Sum Distributions - 2011 Page 2
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3Instructions for Schedule G-1
Tax on Lump-Sum Distributions
General Information
• Choose the 10-year averaging method by
F Capital Gain Election
completing Part III .
The plan participant must have been born
California does not impose tax on distributions
• Figure tax using the 10-year averaging
before January 2, 1936, to be eligible for the
from qualified retirement plans received by
method, which taxes the ordinary income
capital gain election . Only the taxable amount
nonresidents after December 31, 1995 .
part of the lump-sum distribution in the
of distributions resulting from pre-1974
Under California and federal law, the $5,000
current year as if you received it in equal
participation qualifies for capital gain treatment .
employer-provided death benefit exclusion was
parts over 10 years .
The amount that qualifies for capital gain
repealed . Payments received in 2011 on behalf
10-Year Averaging Method & Capital Gain
treatment should be shown in Form 1099-R,
of decedents dying on or after August 21, 1996,
Election. If the participant was born before
box 3 . If there is an amount in Form 1099-R,
do not qualify for the exclusion .
January 2, 1936, use Part III to choose the
box 6 NUA, part of it may also qualify for capital
A Purpose
10-year averaging method to figure your tax
gain treatment . See the NUA Worksheet in the
on the lump-sum distribution . You may choose
If you received a qualified lump-sum
instructions for federal Form 4972, page 3, to
distribution in 2011, and were born before
this option whether or not you make the 5 .5%
figure the capital gain part of NUA . Figure the
capital gain election described in General
January 2, 1936, you can use Schedule G-1,
tax using 5 .5% instead of the 20% used for
Information F, Capital Gain Election .
Tax on Lump-Sum Distributions, to figure your
federal purposes .
tax by special methods that may result in less
Distribution Statement. The payer should have
If your distribution includes capital gain, you
tax . You pay the tax only once, for the year you
given you federal Form 1099-R, Distributions
can either:
receive the distribution, not over the next 10
From Pensions, Annuities, Retirement or Profit-
• Make the 5 .5% capital gain election in Part II
years . The separate tax is added to the regular
Sharing Plans, IRAs, Insurance Contracts, etc .,
of Schedule G-1 .
tax figured on your other income .
or other statement that shows the separate
• Treat the capital gain as ordinary income .
California law regarding the capital gain election
parts of your distribution . The amounts you
G Tax on Prior Year Lump-Sum
will use from federal Form 1099-R in filling out
and the 10-year averaging method on lump-sum
Distributions
Schedule G-1 are capital gain (box 3); ordinary
distributions is generally the same as federal
income (box 2a minus box 3); total of ordinary
law . However, your California basis in your
In some circumstances, the federal rules for
pension plan may differ from your federal basis .
income plus capital gain (box 2a); net unrealized
multiple lump-sum distributions do not apply
appreciation (NUA) in employer’s securities
If you received a lump-sum distribution from
for California . Under California law, if you
(box 6); and, if it applies, the current actuarial
a Keogh plan, your California basis includes
received a lump-sum distribution before 1987
value of an annuity (box 8) . If you do not have a
the contributions that were not deductible for
and you received a lump-sum distribution in
California purposes because they exceeded
statement that shows this information, ask the
2011 that is the only lump-sum distribution
payer for one that does show it .
the California deduction limit for years prior to
you received after 1986, figure your tax on
1987 . Get FTB Pub . 1005, Pension and Annuity
the lump-sum distribution for 2011 separately
D How Often You Can Choose
Guidelines, for more information .
on Schedule G-1 . Do not include the lump-
After 1986, use Schedule G-1 only once for
sum distribution you received before 1987 on
For federal purposes, any capital gain is
each plan participant . If you receive more
Schedule G-1 .
reduced by the amount of related estate
than one lump-sum distribution for the same
tax . However, California does not have a
Specific Line Instructions
plan participant in one tax year, treat all of the
comparable reduction .
distributions in the same way . Combine the
If you received more than one qualified
distributions on a single Schedule G-1 .
Early Distribution. If you received an early
distribution for the same plan participant, add
distribution from a qualified retirement plan,
If you make an election as a beneficiary of a
them and figure the tax on the total amount .
you may have to pay an additional 2½%
deceased participant, it does not affect any
If you and your spouse/RDP file a joint return
tax, unless the distribution meets one of the
election you can make for qualified lump-sum
and each has received a lump-sum distribution,
exceptions . Get form FTB 3805P, Additional
distributions from your own plan . You can also
complete and file a separate Schedule G-1 for
Taxes on Qualified Plans (Including IRAs)
make a separate election as the beneficiary of
each spouse’s/RDP’s election and combine the
and Other Tax-Favored Accounts, for more
more than one qualifying person .
tax on Form 540, line 34 or Long Form 540NR,
information .
Example: Your mother and father died and
line 41 .
B Who Can Use the Form
each was born before January 2, 1936 . Each
If you file for a trust that shared the distribution
participated in a qualified plan of which you are
If you received a qualified lump-sum
with other trusts, figure the tax on the whole
the beneficiary . You also received a qualified
distribution and were born before January 2,
lump-sum first . The trusts then share the tax
lump-sum distribution from your own plan
1936, you can use Schedule G-1 . If you
in the same proportion that they shared the
received a qualifying distribution as a
and you were born before January 2, 1936 .
distribution .
You may make a separate election for each
beneficiary after a participant’s death, the
Part II
of the distributions; one for yourself, one as
deceased must have been born before
Line 6
your mother’s beneficiary, and one as your
January 2, 1936, for you to use this form for
Enter zero (-0-) and go to Part III if your distri-
that distribution .
father’s beneficiary . It does not matter if the
bution does not include capital gain, or if you
distributions all occur in the same year or in
To determine if the distribution qualifies, see
are not making the 5 .5% capital gain election .
different years . File a separate Schedule G-1 for
the instructions for federal Form 4972, Tax on
each participant’s distribution .
If you make the 5 .5% capital gain election but
Lump-Sum Distributions .
do not take a death benefit exclusion, enter
E When You Can Choose
C How to Use the Form
on line 6 the entire capital gain amount from
You can file Schedule G-1 with either an original
Use Schedule G-1 with Form 540, California
federal Form 1099-R, box 3 .
return or an amended return . Generally, you
Resident Income Tax Return; Long
If you make the 5 .5% capital gain election and
have 4 years from the later of the due date of
Form 540NR, California Nonresident or Part-
you are taking the death benefit exclusion, figure
your tax return or the date you filed your return
Year Resident Income Tax Return; or Form 541,
the amount to enter using the worksheet below .
to choose to use any part of Schedule G-1 .
C alifornia Fiduciary Income Tax Return, to:
• Choose the 5 .5% capital gain method by
completing Part II .
Page 1 Schedule G-1 Instructions 2011
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