Is there any special tax treatment for Lump-Sum Distributions ?
If you receive a lump-sum distribution from a qualified retirement plan or a qualified retirement annuity and you were born before January 2, 1936 , you may be able to elect optional methods of figuring the tax on the distribution. These optional methods can be elected only once after 1986 for any eligible plan participant. A lump-sum distribution is the distribution or payment, within a single tax year, of a plan participant’s entire balance from all of the employer’s qualified plans of one kind (pension, profit- sharing, or stock bonus plans). If the participant has more than one account in any category, all those accounts must be distributed in order to qualify as a lump-sum distribution. If the lump-sum distribution qualifies, you can elect to treat the portion of the payment attributable to your active participation in the plan before 1974 as long-term capital gain taxed at a 20% rate. You can also elect to figure the tax on the rest of the distribution using the 10-year tax optio
