Special tax computations are used for qualified recipients of certain lump-sum distributions from qualified retirement plans. They include the five-year or ten-year tax options that are used to figure the tax on the ordinary income part of the distribution. Lump-sum distributions must meet specific requirements to qualify for optional tax treatment.

The election to use either option can be made only once after 1986 by a participant born before 1936. A participant born after 1935, who has reached age 59½ at the time the distribution is made, can only use the 5-year tax option.

Note: The 5-year option was only available for lump-sum distributions received on or before December 31, 1999.

Form 4972 is used to compute the tax on a lump-sum distribution. Its instructions contain detailed information. Select Topic 412 which discusses lump sum distributions. Additional material can be found in Publication 575, Pension and Annuity Income. Publications and forms may be downloaded from this site, or ordered by calling 1-800-829-3676.

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