What is a lump sum distribution?
A lump sum distribution may be available to you whenever you’re separated from your employer, whether due to retirement, a job change or layoff. Depending on how long you’ve been with your employer, you may have to manage a lump sum distribution of a considerable amount. To be considered a lump sum distribution for tax purposes, the following must apply: • The money must come from an IRS-qualified plan, such as a 401(k), profit-sharing or other qualified retirement plan. • It must be payable due to separation from service (but not if you are self-employed), death, disability (only if you are self-employed) or after you have reached age 59 1/2. • You must receive the entire amount in your account within one tax year.
Related Questions
- If I retire after September 1, 2010 and elect the 30 percent lump sum distribution, can I get the remaining 30 percent when benefit restrictions are lifted?
- Does an employee who is retiring have the option to take a lump sum distribution?
- I was born before 1936, what are my options for lump sum distribution?
