Instructions For Forms 1099-R And 5498 - 2015 (Page 12 of 23) in pdf

Reconciliation Act of 2001. Enter the full amount eligible

additional tax specified in section 72(q), (t), or (v), you are

for the capital gain election. You should not complete this

not required to withhold that tax.

box for a direct rollover.

The amount withheld cannot be more than the

To compute the months of an employee's active

sum of the cash and the FMV of property

TIP

participation before 1974, count as 12 months any part of

(excluding employer securities) received in the

a calendar year in which an employee actively

distribution. If a distribution consists solely of employer

participated under the plan; for active participation after

securities and cash ($200 or less) in lieu of fractional

1973, count as 1 month any part of a month in which the

shares, no withholding is required.

employee actively participated under the plan. See the

Example, below.

To determine your withholding requirements for any

designated distribution under section 3405, you must first

Active participation begins with the first month in which

determine whether the distribution is an eligible rollover

an employee became a participant under the plan and

distribution. See Direct Rollovers, earlier, for a discussion

ends with the earliest of:

of eligible rollover distributions. If the distribution is not an

The month in which the employee received a lump-sum

eligible rollover distribution, the rules for periodic

distribution under the plan;

payments or nonperiodic distributions apply. For purposes

For an employee, other than a self-employed person or

of withholding, distributions from any IRA are not eligible

owner-employee, the month in which the employee

rollover distributions.

separates from service;

The month in which the employee dies; or

Eligible rollover distribution; 20% withholding. If an

For a self-employed person or owner-employee, the

eligible rollover distribution is paid directly to an eligible

first month in which the employee becomes disabled

retirement plan in a direct rollover, do not withhold federal

within the meaning of section 72(m)(7).

income tax. If any part of an eligible rollover distribution is

not a direct rollover, you must withhold 20% of the part

that is paid to the recipient and includible in gross income.

Method for Computing Amount Eligible for

This includes the earnings portion of any nonqualified

Capital Gain Election (See Box 3.)

designated Roth account distribution that is not directly

Step 1. Total Taxable Amount

rolled over. The recipient cannot claim exemption from the

20% withholding but may ask to have additional amounts

A. Total distribution

XXXXX

withheld on Form W-4P, Withholding Certificate for

B. Less:

Pension or Annuity Payments. If the recipient is not asking

1. Current actuarial value of any annuity

XXXX

that additional amounts be withheld, Form W-4P is not

2. Employee contributions or designated Roth

required for an eligible rollover distribution because 20%

contributions (minus any amounts previously

withholding is mandatory.

distributed that were not includible in the

employee's gross income)

XXXX

Employer securities and plan loan offset amounts that

3. Net unrealized appreciation in the value of

are part of an eligible rollover distribution must be

any employer securities that was a part of the

included in the amount multiplied by 20%. However, the

XXXX

lump-sum distribution.

actual amount to be withheld cannot be more than the

C. Total of lines 1 through 3

XXXXX

sum of the cash and the FMV of property (excluding

employer securities and plan loan offset amounts). For

D. Total taxable amount. Subtract line C from

XXXXX

example, if the only part of an eligible rollover distribution

line A.

that is not a direct rollover is employer securities or a plan

loan offset amount, no withholding is required. However,

Step 2. Capital Gain

unless otherwise exempt, any cash that is paid in the

distribution must be used to satisfy the withholding on the

employer securities or plan loan offset amount.

Total taxable

Months of active

Depending on the type of plan or arrangement, the

amount

participation before 1974

payer or, in some cases, the plan administrator is required

Line D

____________________

= Capital gain

to withhold 20% of eligible rollover distributions from a

qualified plan's distributed annuity and on eligible rollover

Total months of active

distributions from a governmental section 457(b) plan. For

participation

additional information, see section 3405(d) and

Regulations sections 35.3405-1T, A-13; and

31.3405(c)-1, Q/A 4 and 5. For governmental section

Box 4. Federal Income Tax Withheld

457(b) plans only, see Notice 2003-20.

Enter any federal income tax withheld. This withholding

Any NUA excludable from gross income under section

under section 3405 is subject to deposit rules and the

402(e)(4) is not included in the amount of any eligible

withholding tax return is Form 945. Backup withholding

rollover distribution that is subject to 20% withholding.

does not apply. See Pub. 15-A, Employer's Supplemental

You are not required to withhold 20% of an eligible

Tax Guide, and the Instructions for Form 945 for more

rollover distribution that, when aggregated with other

withholding information.

eligible rollover distributions made to one person during

Even though you may be using Code 1 in box 7 to

the year, is less than $200.

designate an early distribution subject to the 10%

-12-

Instructions for Forms 1099-R and 5498 (2015)

Instructions For Forms 1099-R And 5498 - 2015 Page 12

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