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Topic 412 Lump Sum Distributions, Box 6 of Form 1099-R - YouTube
Channel: Maths Platter
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if you receive a lump sum distribution
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from a qualified retirement plan or a
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qualified retirement annuity and you
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were born before January 2nd 1936 you
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may be able to elect optional methods of
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figuring the tax on the distribution
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these optional methods can be elected
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only once after 1986 for any eligible
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plan participant a lump sum distribution
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is the distribution or payment within a
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single tax year of a plan participants
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entire balance from all of the employers
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qualified plans of one kind for example
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pension profit sharing or stock bonus
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plans additionally a lump sum
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distribution is a distribution that's
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paid because of the plan participants
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death after the participant reaches age
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59 and a half because the participant if
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an employee separates from service or
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after the participant if a self-employed
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individual becomes totally and
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permanently disabled you can elect to
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treat the portion of a lump sum
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distribution that's attributable to your
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active participation in the plan using
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one of five options you may report the
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taxable part of the distribution from
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participation before 1974 as a capital
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gain if you qualify and the taxable part
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of the distribution from participation
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after 1973 as ordinary income you may
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report the taxable part of the
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distribution from participation before
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1974 as a capital gain if you qualify
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and use the 10-year tax option to figure
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the tax on the part from participation
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after 1973 if you qualify you may use
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the 10-year tax option to figure the tax
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on the total taxable amount if you
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qualify you may roll over all or part of
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the distribution no tax is currently due
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on the part holdover you may also report
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any part not rolled over as ordinary
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income finally you may report the entire
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taxable part as ordinary income
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if the lump sum distribution includes
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employer securities and the payer
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reported an amount in box six of your
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form 1099 our four net unrealized
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appreciation in employer securities the
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net unrealized appreciation is generally
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not subject to tax until you sell the
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securities however you may elect to
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include the net unrealized appreciation
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in your income in the year the
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securities are distributed to you you
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should receive a form 1099 R from the
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payer of the lump sum distribution
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showing your taxable distribution and
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the amount eligible for capital gain
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treatment if your form 1099 R isn't made
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available to you by January 31st of the
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year following the year of the
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distribution you should contact the
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payer of your lump sum distribution you
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may be able to defer tax on all our part
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of a lump sum distribution by requesting
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the payer to directly rollover the
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taxable portion into an individual
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retirement arrangement or to an eligible
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retirement plan you may also be able to
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defer tax on a distribution paid to you
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by rolling over the taxable amount to an
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IRA within sixty days after receipt of
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the distribution if you do a rollover
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the regular IRA distribution rules will
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apply to any later distributions and you
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can't use the special tax treatment
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rules for lump sums refer to tropic 413
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for more information on rollovers
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mandatory income tax withholding of 20%
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applies to most taxable distributions
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paid directly to you in a lump sum from
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employer retirement plans even if you
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plan to roll over the taxable amount
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within 60 days for more information on
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the rules for lump sum distributions
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including information for beneficiaries
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and alternate payees information on
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distributions that don't qualify for the
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twenty percent capital gain election or
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the 10 year tax option and including
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information on net unrealized
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appreciation treatment for these
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distributions refer to publication
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seventy-five pension and annuity income
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and the instructions for form 4970 to
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tax on lump sum distributions
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information is also available in
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publication seventeen your federal
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income tax for individuals the
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publications are available on IRS
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website
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you
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