Tax Facts

3971 / What is a lump sum distribution? What special tax treatment is available for a lump sum distribution from a qualified plan?

A distribution is a lump sum distribution if it:

(1)  is made in one taxable year;

(2)  consists of the balance to the credit of an employee;

(3)  is payable on account of the employee’s death, after the employee attained age 59½, disabled or on account of the employee’s separation from service; and

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