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Frequently Asked Tax Questions

Pensions/Annuities/Retirement Plans (i.e., 401(k), etc.) - Types of Plans


Rev. date: 9/16/2010


I received a lump-sum distribution when I retired. Is there any special tax averaging option on a lump-sum distribution?

previous topic occurrence Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (Info Copy Only) next topic occurrence
previous topic occurrence Distributions, Lump-sum next topic occurrence
previous topic occurrence Lump-sum Distribution next topic occurrence
previous topic occurrence Penalty, Early Distributions from IRAs and Plans next topic occurrence
previous topic occurrence Pension and Annuity Income next topic occurrence
previous topic occurrence Profit Sharing Plan next topic occurrence
previous topic occurrence Qualified Plan next topic occurrence
previous topic occurrence Retirement Plan next topic occurrence
previous topic occurrence Tax Sheltered Annuity next topic occurrence

A lump-sum distribution is the distribution or payment, within a single tax year, of an employee's entire balance from all of the employer's qualified pension, profit-sharing, or stock bonus plans. If you were born on or before January 1, 1936, or are the beneficiary of a participant born on or before January 1, 1936,  you may be able to able to elect optional methods of figuring the tax on lump-sum distributions you received from an eligible retirement plan.  These optional methods can be elected only once after 1986.
For other situations and further information, see Publication 575, Pension and Annuity Income.

Rev. date: 2/15/2011


If taxes are withheld from a distribution from a 401(k) plan, am I required to include the amount of the distribution as income and also pay the 10% additional tax?

previous topic occurrence Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts next topic occurrence
previous topic occurrence Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (Info Copy Only) next topic occurrence
previous topic occurrence Lump-sum Distribution next topic occurrence
previous topic occurrence Penalty, Early Distributions from IRAs and Plans next topic occurrence
previous topic occurrence Pension and Annuity Income next topic occurrence
previous topic occurrence Profit Sharing Plan next topic occurrence
previous topic occurrence Qualified Plan next topic occurrence
previous topic occurrence Qualified Withdrawals next topic occurrence
previous topic occurrence Retirement Plan next topic occurrence

 

Rev. date: 8/30/2010


Can I withdraw my elective deferrals to a 401(k) plan to build or purchase my first home without paying the 10% additional tax on early distributions?


Rev. date: 8/30/2010


I changed jobs and received a distribution (via check) of my entire vested account under my former employer's 401(k) plan. The plan withheld 20% of my account for Federal Income Taxes. Within 60 days of receiving the distribution, I rolled over the distribution to my current employer's 401(k) plan. Since taxes were withheld from the distribution made by my former employer's plan, do I have to include that money as income?

previous topic occurrence Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts next topic occurrence
previous topic occurrence Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (Info Copy Only) next topic occurrence
previous topic occurrence Lump-sum Distribution next topic occurrence
previous topic occurrence Penalty, Early Distributions from IRAs and Plans next topic occurrence
previous topic occurrence Pension and Annuity Income next topic occurrence
previous topic occurrence Plan next topic occurrence
previous topic occurrence Profit Sharing Plan next topic occurrence
previous topic occurrence Qualified Plan next topic occurrence
previous topic occurrence Qualified Withdrawals next topic occurrence
previous topic occurrence Retirement Plan next topic occurrence
previous topic occurrence Rollover next topic occurrence

 
If the amount rolled over was the net amount (the amount of the distribution less the tax withheld):
If the amount rolled over was the gross amount (the amount rolled over included the 20% that was withheld):

Rev. date: 1/28/2011


If I retire or leave my employer for any reason (including due to being laid off) before I am age 59 1/2, can I withdraw my vested benefits under that employer's 401(k) plan, without having to pay a 10% additional tax? What if I were 55 or older when I separated from service with my employer?

previous topic occurrence Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts next topic occurrence
previous topic occurrence Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (Info Copy Only) next topic occurrence
previous topic occurrence Lump-sum Distribution next topic occurrence
previous topic occurrence Penalty, Early Distributions from IRAs and Plans next topic occurrence
previous topic occurrence Pension and Annuity Income next topic occurrence
previous topic occurrence Profit Sharing Plan next topic occurrence
previous topic occurrence Qualified Plan next topic occurrence
previous topic occurrence Qualified Withdrawals next topic occurrence
previous topic occurrence Retirement Plan next topic occurrence

 
Generally, unless an exception applies, a distribution of your benefits from a 401(k) plan before age 59 ½ is subject to the 10% additional tax on early distributions from retirement plans. See Publication 575, Pension and Annuity Income.
 
However, there are special rules that apply to earlier distributions.  For example, a distribution from a 401(k) plan that is made after separation from service and age and in in each year after you reach 55 is not subject to the 10% tax.

Rev. date: 8/18/2010


Where can I find additional information on various types of tax-favored retirement arrangements?

previous topic occurrence Contributions (IRAs & Pension Plans) next topic occurrence
previous topic occurrence Distributions, Minimum Required next topic occurrence
previous topic occurrence Penalty, Early Distributions from IRAs and Plans next topic occurrence
previous topic occurrence Retirement Plans for Small Business (SEP, SIMPLE and Qualified Plans) next topic occurrence
previous topic occurrence SEP-IRA next topic occurrence
previous topic occurrence SIMPLE IRA next topic occurrence

The following IRS publications include additional information on retirement plans:
You may find additional information on the IRS’s website.
Additional Information