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            Department of the Treasury                        Contents
            Internal Revenue Service
                                                              Future Developments . . . . . . . . . . . . . . . . . . . . . . .          1
                                                              What’s New     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Publication 575
Cat. No. 15142B                                               Reminders    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                              Introduction   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                              General Information . . . . . . . . . . . . . . . . . . . . . . . .        4
Pension and 
                                                              Variable Annuities         . . . . . . . . . . . . . . . . . . . . . . . . 5
                                                              Section 457 Deferred Compensation Plans                        . . . . . . 6
Annuity                                                       Disability Pensions . . . . . . . . . . . . . . . . . . . . . . .          6
                                                              Insurance Premiums for Retired Public Safety 
                                                                    Officers   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Income                                                        Railroad Retirement Benefits . . . . . . . . . . . . . . . .               7
                                                              Withholding Tax and Estimated Tax . . . . . . . . . .                      10
For use in preparing
                                                              Cost (Investment in the Contract)                . . . . . . . . . . . .   11
2022 Returns                                                  Taxation of Periodic Payments                . . . . . . . . . . . . . .   12
                                                              Fully Taxable Payments               . . . . . . . . . . . . . . . . . .   12
                                                              Partly Taxable Payments . . . . . . . . . . . . . . . . . .                12
                                                              Taxation of Nonperiodic Payments                   . . . . . . . . . . .   16
                                                              Figuring the Taxable Amount . . . . . . . . . . . . . . .                  16
                                                              Loans Treated as Distributions                 . . . . . . . . . . . . .   19
                                                              Transfers of Annuity Contracts . . . . . . . . . . . . . .                 20
                                                              Lump-Sum Distributions               . . . . . . . . . . . . . . . . . .   21
                                                              Rollovers    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
                                                              Special Additional Taxes           . . . . . . . . . . . . . . . . . . .   33
                                                              Tax on Early Distributions             . . . . . . . . . . . . . . . . .   33
                                                              Tax on Excess Accumulation . . . . . . . . . . . . . . .                   37
                                                              Survivors and Beneficiaries . . . . . . . . . . . . . . . . .              39
                                                              Disaster-Related Relief        . . . . . . . . . . . . . . . . . . . . .   40
                                                              Qualified Disaster Recovery Distributions . . . . . .                      40
                                                              Repayment of Qualified Disaster Distributions                      . . .   42
                                                              Loans From Qualified Plans               . . . . . . . . . . . . . . . .   43
                                                              How To Get Tax Help          . . . . . . . . . . . . . . . . . . . . . .   45
                                                              Worksheet A. Simplified Method                 . . . . . . . . . . . . .   49
                                                              Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  50

                                                              Future Developments
                                                              For the latest information about developments related to 
                                                              Pub.  575,  such  as  legislation  enacted  after  it  was 
                                                              published, go to IRS.gov/Pub575.

                                                              What’s New
Get forms and other information faster and easier at:         Qualified disaster tax relief.           The special rules that pro-
• IRS.gov (English)         • IRS.gov/Korean (한국어)            vide  for  tax-favored  withdrawals  and  repayments  from 
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) 
• IRS.gov/Chinese (中文)      • IRS.gov/Vietnamese (Tiếng Việt) certain  qualified  plans  for  taxpayers  who  suffered  an 

Apr 12, 2023

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economic  loss  as  a  result  of  a  qualified  disaster  were      Repayment  of  qualified  birth  or  adoption  distribu-
made permanent by the SECURE 2.0 Act of 2022.                        tions limited to 3 years. If you received a qualified birth 
A qualified disaster is a major disaster that occurred on            or adoption distribution after December 29, 2022, you may 
or after January 26, 2021, and was declared by the Presi-            repay the distribution by making one or more contributions 
dent after December 27, 2020, under section 401 of the               to a qualified plan during the 3-year period beginning on 
Robert T. Stafford Disaster Relief and Emergency Act. For            the  day  after  the  date  on  which  the  distribution  was  re-
more information, see Disaster-Related Relief, later.                ceived.
Exception  to  10%  additional  tax  for  early  distribu-           For  distributions  received  on  or  before  December  29, 
tions expanded to include additional distributions to                2022, you may repay the distribution during the period that 
qualified  public  safety  employees. The  exception  to             begins after the distribution was received and ending on 
the 10% additional tax for early distributions is expanded           the date before January 1, 2026.
to  apply  to  the  following  distributions  made  to  qualified    The direct payment requirement for certain distribu-
public safety employees after separation from service on             tions for payment of health or long-term care insur-
or after December 30, 2022:                                          ance,  repealed. Distributions  from  governmental  plans 
• Distributions to employees separating from service on              to an eligible retired public safety officer made after De-
  or after they reach age 50 or employees with 25 years              cember 29, 2022, for health and long-term care insurance 
  of service under the plan, whichever is earlier.                   can  be  excluded  from  that  employee’s  gross  income 
                                                                     whether the premiums are made directly to the provider of 
• Distributions to firefighters covered by private sector            the accident or health plan or qualified long-term care in-
  retirement plans; and                                              surance contract by deduction from a distribution from the 
• Distributions to those employees who provide serv-                 eligible retirement plan or is made to the employee.
  ices as a corrections officer or as a forensic security            The amount which may be excluded from gross income 
  employee providing for the care, custody, and control              for the taxable year can’t exceed the lesser of $3,000 or 
  of forensic patients who meet the age requirement,                 the amount paid for the insurance.
  above.
                                                                     Certain  corrective  distributions  not  subject  to  10% 
Distributions  to  individuals  who  are  terminally  ill.           early distribution tax. Beginning with distributions made 
The exception to the 10% additional tax for early distribu-          on December 29, 2022 and after, the 10% additional tax 
tions is expanded to apply to distributions made to termi-           on early distributions will not apply to a corrective IRA dis-
nally  ill  individuals  on  or  after  December  30,  2022.  See    tribution,  which  consists  of  an  excessive  contribution  (a 
Terminally ill individuals, for more information.                    contribution  greater  than  the  IRA  contribution  limit)  and 
                                                                     any earnings (the portion of the distribution subject to the 
Required  minimum  distributions  (RMDs).         Individuals 
                                                                     10%  additional  tax)  allocable  to  the  excessive  contribu-
who  reach  age  72  after  December  31,  2022,  may  delay 
                                                                     tion, as long as the corrective distribution is made on or 
receiving their RMDs until April 1 of the year following the 
                                                                     before the due date (including extensions) of the income 
year in which they turn age 73.
                                                                     tax return.
Statute of limitations rules changed for excess con-
tributions and excess accumulations.  Beginning on or                Excise  tax  rate  for  excess  accumulations  reduced. 
after December 29, 2022, the statute of limitations for ex-          The excise tax rate for distributions that are less than the 
cess  contributions  and  excess  accumulations  (resulting          required minimum distribution amount (excess accumula-
from distributions less than the required minimum distribu-          tions) is reduced to 25% for tax years beginning in 2023 
tion) is changed. Under the new rules, the statute of limita-        and after.
tions is changed to provide relief to taxpayers not aware of         You  may  be  subject  to  a  reduced  excise  tax  rate  of 
the  requirement  to  file  Form  5329,  Additional  Taxes  on       10% of the amount not distributed, if, during the correction 
Qualified  Plans  (Including  IRAs)  and  Other  Tax-Favored         window,  you  take  a  distribution  of  the  amount  on  which 
Accounts.  If  you  are  required  to  file  a  tax  return,  attach the tax is due and submit a tax return reflecting this excise 
Form 5329 to your return. If you are not required to file a          tax.
tax return, complete and file Form 5329 by itself.                   The “correction window” is the period of time beginning 
The  period  of  limitations  now  begins  for  Form  5329           on the date on which the excise tax is imposed on the dis-
nonfilers when the individual files the income tax return for        tribution shortfall and ends on the earliest of the following 
the year of the violation. If the individual is not required to      dates:
file an income tax return for the year, the period of limita-        •   The date of mailing the deficiency notice with respect 
tions is also triggered when the taxpayer would have been                to the imposition of this tax; or
required to file, without regard to any extension. The new 
rules now extend the 3-year limitations period to six-years          •   The date the tax is assessed; or
for excess contributions when the income tax return trig-            •   The last day of the second taxable year that begins af-
gers the period.                                                         ter the date of the taxable year in which the excise tax 
However, filing the income tax return does not start the                 is imposed.
period (of limitations) where excise taxes on excess con-
tributions  are  attributable  to  acquiring  property  for  less    Substantially  equal  payments  clarified. Distributions 
than fair market value.                                              received as periodic payments on or after December 29, 

Page 2                                                                                                    Publication 575 (2022)

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2022, will not fail to be treated as substantially equal • When additional taxes on certain distributions may ap-
merely because they are received as an annuity. ply (including the tax on early distributions and the tax
on excess accumulation).
For additional information on how to report pen-
Reminders TIP sion or annuity payments on your federal income
tax return, be sure to review the instructions on
Form 8915-F replaces Form 8915-E. Form 8915-F, the back of Copies B, C, and 2 of the Form 1099-R, Distri-
Qualified Disaster Retirement Plan Distributions and Re- butions From Pensions, Annuities, Retirement or
payments, replaces Form 8915-E for reporting qualified Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that
2020 disaster distributions and repayments of those distri- you received and the instructions for Form 1040, lines 5a
butions made in 2021 and 2022, as applicable. In previ- and 5b, and the instructions for Form 1040-NR, lines 5a
ous years, distributions and repayments would be repor- and 5b.
ted on the applicable Form 8915 for that year's disasters.
For example, Form 8915-D, Qualified 2019 Disaster Re- A “corrected” Form 1099-R replaces the corre-
tirement Plan Distributions and Repayments, would be ! sponding original Form 1099-R if the original
used to report qualified 2019 disaster distributions and re- CAUTION Form 1099-R contained an error. Make sure you
payments. use the amounts shown on the corrected Form 1099-R
Form 8915-F is a forever form. Beginning in 2021, addi- when reporting information on your tax return.
tional alphabetical Forms 8915 will not be issued. For
more information, see the Instructions for Form 8915-F. What isn't covered in this publication? The following
topics aren't discussed in this publication.
Photographs of missing children. The IRS is a proud
partner with the National Center for Missing & Exploited The General Rule. This is the method generally used
Children® (NCMEC). Photographs of missing children se- to determine the tax treatment of pension and annuity in-
lected by the Center may appear in this publication on pa- come from nonqualified plans (including commercial an-
ges that would otherwise be blank. You can help bring nuities). For a qualified plan, you can’t generally use the
these children home by looking at the photographs and General Rule unless your annuity starting date is before
calling 1-800-THE-LOST (1-800-843-5678) if you recog- November 19, 1996. Although this publication will help
nize a child. you determine whether you can use the General Rule, it
won't help you use it to determine the tax treatment of
your pension or annuity income. For that and other infor-
mation on the General Rule, see Pub. 939, General Rule
Introduction for Pensions and Annuities.
This publication discusses the tax treatment of distribu- Individual retirement arrangements (IRAs). Infor-
tions you receive from pension and annuity plans and also mation on the tax treatment of amounts you receive from
shows you how to report the income on your federal in- an IRA is in Pub. 590-B.
come tax return. How these distributions are taxed de-
pends on whether they are periodic payments (amounts Civil service retirement benefits. If you are retired
received as an annuity) that are paid at regular intervals from the federal government (regular, phased, or disability
over several years or nonperiodic payments (amounts not retirement) or are the survivor or beneficiary of a federal
received as an annuity). employee or retiree who died, see Pub. 721, Tax Guide to
U.S. Civil Service Retirement Benefits. Pub. 721 covers
What is covered in this publication? This publication the tax treatment of federal retirement benefits, primarily
contains information that you need to understand the fol- those paid under the Civil Service Retirement System
lowing topics. (CSRS) or the Federal Employees' Retirement System
(FERS). It also covers benefits paid from the Thrift Sav-
• How to figure the tax-free part of periodic payments
ings Plan (TSP).
under a pension or annuity plan, including using a
simple worksheet for payments under a qualified plan. Social security and equivalent tier 1 railroad retire-
• How to figure the tax-free part of nonperiodic pay- ment benefits. For information about the tax treatment of
ments from qualified and nonqualified plans, and how these benefits, see Pub. 915, Social Security and Equiva-
to use the optional methods to figure the tax on lent Railroad Retirement Benefits. However, this publica-
lump-sum distributions from pension, stock bonus, tion (575) covers the tax treatment of the non-social se-
and profit-sharing plans. curity equivalent benefit portion of tier 1 railroad retirement
benefits, tier 2 benefits, vested dual benefits, and supple-
• How to roll over certain distributions from a retirement mental annuity benefits paid by the U.S. Railroad Retire-
plan into another retirement plan or IRA. ment Board.
• How to report disability payments, and how beneficia- Tax-sheltered annuity plans (403(b) plans). If you
ries and survivors of employees and retirees must re- work for a public school or certain tax-exempt organiza-
port benefits paid to them. tions, you may be eligible to participate in a 403(b) retire-
• How to report railroad retirement benefits. ment plan offered by your employer. Although this

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publication covers the treatment of benefits under 403(b) 939 939 General Rule for Pensions and Annuities
plans and discusses in-plan Roth rollovers from 403(b) 976 976 Disaster Relief
plans to designated Roth accounts, it doesn't cover other
tax provisions that apply to these plans. For that and other Form (and Instructions)
information on 403(b) plans, see Pub. 571, Tax-Sheltered
W-4P
Annuity Plans (403(b) Plans) For Employees of Public W-4P Withholding Certificate for Pension or Annuity
Schools and Certain Tax-Exempt Organizations. Payments
W-4R W-4R Withholding Certificate for Nonperiodic
Comments and suggestions. We welcome your com- Payments and Eligible Rollover Distributions
ments about this publication and suggestions for future
editions. 1099-R 1099-R Distributions From Pensions, Annuities,
You can send us comments through IRS.gov/ Retirement or Profit-Sharing Plans, IRAs,
FormComments. Or, you can write to the Internal Reve- Insurance Contracts, etc.
nue Service, Tax Forms and Publications, 1111 Constitu- 4972 4972 Tax on Lump-Sum Distributions
tion Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each com- 5329 5329 Additional Taxes on Qualified Plans (Including
ment received, we do appreciate your feedback and will IRAs) and Other Tax-Favored Accounts
consider your comments and suggestions as we revise 8915-C 8915-C Qualified 2018 Disaster Retirement Plan
our tax forms, instructions, and publications. Don’t send Distributions and Repayments
tax questions, tax returns, or payments to the above ad-
8915-D
dress. 8915-D Qualified 2019 Disaster Retirement Plan
Distributions and Repayments
Getting answers to your tax questions. If you have
8915-F
a tax question not answered by this publication or the How 8915-F Qualified Disaster Retirement Plan
To Get Tax Help section at the end of this publication, go Distributions and Repayments
to the IRS Interactive Tax Assistant page at IRS.gov/ See How To Get Tax Help near the end of this publication
Help/ITA where you can find topics by using the search for information about getting publications and forms.
feature or viewing the categories listed.
Getting tax forms, instructions, and publications.
Go to IRS.gov/Forms to download current and prior-year General Information
forms, instructions, and publications.
Ordering tax forms, instructions, and publications. Definitions. Some of the terms used in this publication
Go to IRS.gov/OrderForms to order current forms, instruc- are defined in the following paragraphs.
tions, and publications; call 800-829-3676 to order Pension. A pension is generally a series of definitely
prior-year forms and instructions. The IRS will process determinable payments made to you after you retire from
your order for forms and publications as soon as possible. work. Pension payments are made regularly and are
Don’t resubmit requests you’ve already sent us. You can based on such factors as years of service and prior com-
get forms and publications faster online. pensation.
Annuity. An annuity is a series of payments under a
Useful Items
contract made at regular intervals over a period of more
You may want to see:
than 1 full year. They can be either fixed (under which you
receive a definite amount) or variable (not fixed). You can
Publication
buy the contract alone or with the help of your employer.
524 524 Credit for the Elderly or the Disabled
Qualified employee plan. A qualified employee plan
525 525 Taxable and Nontaxable Income is an employer's stock bonus, pension, or profit-sharing
560 560 Retirement Plans for Small Business (SEP, plan that is for the exclusive benefit of employees or their
SIMPLE, and Qualified Plans) beneficiaries and that meets Internal Revenue Code re-
quirements. It qualifies for special tax benefits, such as tax
571 571 Tax-Sheltered Annuity Plans (403(b) Plans) deferral for employer contributions and capital gain treat-
590-A 590-A Contributions to Individual Retirement ment or the 10-year tax option for lump-sum distributions
Arrangements (IRAs) (if participants qualify). To determine whether your plan is
a qualified plan, check with your employer or the plan ad-
590-B 590-B Distributions from Individual Retirement ministrator.
Arrangements (IRAs)
Qualified employee annuity. A qualified employee
721 721 Tax Guide to U.S. Civil Service Retirement annuity is a retirement annuity purchased by an employer
Benefits for an employee under a plan that meets Internal Revenue
907 907 Tax Highlights for Persons With Disabilities Code requirements.
915 915 Social Security and Equivalent Railroad Designated Roth account. A designated Roth ac-
Retirement Benefits count is a separate account created under a qualified

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Roth contribution program to which participants may elect formula determines the amount of the pension benefits.
to have part or all of their elective deferrals to a 401(k), The amount of contributions is the amount necessary to
403(b), or 457(b) plan designated as Roth contributions. provide that pension.
Elective deferrals that are designated as Roth contribu- Each plan is a separate program and a separate con-
tions are included in your income. However, qualified dis- tract. If you get benefits from these plans, you must ac-
tributions (explained later) aren't included in your income. count for each separately, even though the benefits from
You should check with your plan administrator to deter- both may be included in the same check.
mine if your plan will accept designated Roth contribu-
Distributions from a designated Roth account are
tions.
treated separately from other distributions from
Tax-sheltered annuity plan. A tax-sheltered annuity CAUTION! the plan.
plan (often referred to as a 403(b) plan or a tax-deferred
annuity plan) is a retirement plan for employees of public Qualified domestic relations order (QDRO). A QDRO
schools and certain tax-exempt organizations. Generally, is a judgment, decree, or order relating to payment of child
a tax-sheltered annuity plan provides retirement benefits support, alimony, or marital property rights to a spouse,
by purchasing annuity contracts for its participants. former spouse, child, or other dependent of a participant
in a retirement plan. The QDRO must contain certain spe-
Types of pensions and annuities. Pensions and annui- cific information, such as the name and last known mailing
ties include the following types. address of the participant and each alternate payee, and
Fixed-period annuities. You receive definite the amount or percentage of the participant's benefits to
amounts at regular intervals for a specified length of time. be paid to each alternate payee. A QDRO may not award
an amount or form of benefit that isn't available under the
Annuities for a single life. You receive definite plan.
amounts at regular intervals for life. The payments end at A spouse or former spouse who receives part of the
death. benefits from a retirement plan under a QDRO reports the
Joint and survivor annuities. The first annuitant re- payments received as if they were a plan participant. The
ceives a definite amount at regular intervals for life. After spouse or former spouse is allocated a share of the partic-
they die, a second annuitant receives a definite amount at ipant's cost (investment in the contract) equal to the cost
regular intervals for life. The amount paid to the second times a fraction. The numerator of the fraction is the
annuitant may or may not differ from the amount paid to present value of the benefits payable to the spouse or for-
the first annuitant. mer spouse. The denominator is the present value of all
benefits payable to the participant.
Variable annuities. You receive payments that may A distribution that is paid to a child or other dependent
vary in amount for a specified length of time or for life. The under a QDRO is taxed to the plan participant.
amounts you receive may depend upon such variables as
profits earned by the pension or annuity funds, cost-of-liv-
ing indexes, or earnings from a mutual fund. Variable Annuities

Disability pensions. You receive disability payments The tax rules in this publication apply both to annuities
because you retired on disability and haven't reached that provide fixed payments and to annuities that provide
minimum retirement age. payments that vary in amount based on investment results
or other factors. For example, they apply to commercial
More than one program. You may receive employee variable annuity contracts, whether bought by an em-
plan benefits from more than one program under a single ployee retirement plan for its participants or bought di-
trust or plan of your employer. If you participate in more rectly from the issuer by an individual investor. Under
than one program, you may have to treat each as a sepa- these contracts, the owner can generally allocate the pur-
rate pension or annuity contract, depending upon the chase payments among several types of investment port-
facts in each case. Also, you may be considered to have folios or mutual funds and the contract value is deter-
received more than one pension or annuity. Your former mined by the performance of those investments. The
employer or the plan administrator should be able to tell earnings aren't taxed until distributed either in a with-
you if you have more than one contract. drawal or in annuity payments. The taxable part of a distri-
bution is treated as ordinary income.
Example. Your employer set up a noncontributory
profit-sharing plan for its employees. The plan provides For information on the tax treatment of a transfer or ex-
that the amount held in the account of each participant will change of a variable annuity contract, see Transfers of
be paid when that participant retires. Your employer also Annuity Contracts under Taxation of Nonperiodic Pay-
set up a contributory defined benefit pension plan for its ments, later.
employees providing for the payment of a lifetime pension
to each participant after retirement. Net Investment Income Tax (NIIT). Annuities under a
The amount of any distribution from the profit-sharing nonqualified plan are included in calculating your net in-
plan depends on the contributions (including allocated for- vestment income for the NIIT. See Form 8960, Net Invest-
feitures) made for the participant and the earnings from ment Income Tax—Individuals, Estates, and Trusts, and
those contributions. Under the pension plan, however, a its instructions for more information.

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Withdrawals. If you withdraw funds before your annuity investment of the deferred pay. You are generally taxed
starting date and your annuity is under a qualified retire- on amounts deferred in an eligible state or local govern-
ment plan, a ratable part of the amount withdrawn is tax ment plan only when they are distributed from the plan.
free. The tax-free part is based on the ratio of your cost You are taxed on amounts deferred in an eligible tax-ex-
(investment in the contract) to your account balance under empt organization plan when they are distributed or other-
the plan. wise made available to you.
If your annuity is under a nonqualified plan (including a
Your 457(b) plan may have a designated Roth account
contract you bought directly from the issuer), the amount
option. If so, you may be able to roll over amounts to the
withdrawn is allocated first to earnings (the taxable part)
designated Roth account or make contributions. Elective
and then to your cost (the tax-free part). However, if you
deferrals to a designated Roth account are included in
bought your annuity contract before August 14, 1982, a
your income. Qualified distributions (explained later) aren't
different allocation applies to the investment before that
included in your income. See Designated Roth accounts
date and the earnings on that investment. To the extent
under Taxation of Periodic Payments, later.
the amount withdrawn doesn't exceed that investment and
earnings, it is allocated first to your cost (the tax-free part) This publication covers the tax treatment of benefits un-
and then to earnings (the taxable part). der eligible section 457 plans, but it doesn't cover the
If you withdraw funds (other than as an annuity) on or treatment of deferrals. For information on deferrals under
after your annuity starting date, the entire amount with- section 457 plans, see Retirement Plan Contributions un-
drawn is generally taxable. der Employee Compensation in Pub. 525.
The amount you receive in a full surrender of your an-
nuity contract at any time is tax free to the extent of any Is your plan eligible? To find out if your plan is an eligi-
cost that you haven't previously recovered tax free. The ble plan, check with your employer. Plans that aren’t eligi-
rest is taxable. ble section 457 plans include the following.
For more information on the tax treatment of withdraw- • Bona fide vacation leave, sick leave, compensatory
als, see Taxation of Nonperiodic Payments, later. If you time, severance pay, disability pay, or death benefit
withdraw funds from your annuity before you reach age plans.
59 / , also see 1 2 Tax on Early Distributions under Special
Additional Taxes, later. • Nonelective deferred compensation plans for nonem-
ployees (independent contractors).
Annuity payments. If you receive annuity payments un- • Deferred compensation plans maintained by
der a variable annuity plan or contract, you recover your churches.
cost tax free under either the Simplified Method or the
General Rule, as explained under Taxation of Periodic • Length of service award plans for bona fide volunteer
Payments, later. For a variable annuity paid under a quali- firefighters and emergency medical personnel. An ex-
fied plan, you must generally use the Simplified Method. ception applies if the total amount paid to a volunteer
For a variable annuity paid under a nonqualified plan (in- exceeds $6,500 for any year of service.
cluding a contract you bought directly from the issuer),
you must use a special computation under the General Disability Pensions
Rule. For more information, see Variable annuities under
Computation Under the General Rule in Pub. 939. If you retired on disability, you must generally include in in-
come any disability pension you receive under a plan that
Death benefits. If you receive a single-sum distribution is paid for by your employer. You must report your taxable
from a variable annuity contract because of the death of disability payments as wages on Form 1040, 1040-SR, or
the owner or annuitant, the distribution is generally taxable 1040-NR, line 1a, until you reach minimum retirement
only to the extent it is more than the unrecovered cost of age. Minimum retirement age is generally the age at
the contract. If you choose to receive an annuity, the pay- which you can first receive a pension or annuity if you
ments are subject to tax as described above. If the con- aren't disabled.
tract provides a joint and survivor annuity and the primary
You may be entitled to a tax credit if you were per-
annuitant had received annuity payments before death,
manently and totally disabled when you retired.
you figure the tax-free part of annuity payments you re- TIP
For information on this credit, see Pub. 524.
ceive as the survivor in the same way the primary annui-
tant did. See Survivors and Beneficiaries, later.
Beginning on the day after you reach minimum retire-
ment age, payments you receive are taxable as a pension
Section 457 Deferred Compensation or annuity. When you receive pension or annuity pay-
Plans ments, you are able to recover your cost or investment.
Your cost is generally your net investment in the plan as of
If you work for a state or local government or for a tax-ex- your annuity starting date. It doesn't include pre-tax contri-
empt organization, you may be able to participate in a butions. For more information, see Cost (Investment in the
section 457 deferred compensation plan. If your plan is an Contract) and Taxation of Periodic Payments, later.
eligible plan, you aren't taxed currently on pay that is de-
ferred under the plan or on any earnings from the plan's

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Report the payments on Form 1040, 1040-SR, or include only the taxable amount on that line and enter
1040-NR, lines 5a and 5b. “PSO” and the amount excluded on the dotted line next to
the applicable line.
Disability payments for injuries incurred as a di-
TIP rect result of a terrorist attack directed against the
United States (or its allies) aren't included in in- Railroad Retirement Benefits
come. For more information about payments to survivors
of terrorist attacks, see Pub. 3920, Tax Relief for Victims Benefits paid under the Railroad Retirement Act fall into
of Terrorist Attacks, and Pub. 907. two categories. These categories are treated differently
for income tax purposes.
Military and government disability pensions. Certain The first category is the amount of tier 1 railroad retire-
military and government disability pensions aren’t taxable. ment benefits that equals the social security benefit that a
Service-connected disability. You may be able to railroad employee or beneficiary would have been entitled
exclude from income amounts you receive as a pension, to receive under the social security system. This part of
annuity, or similar allowance for personal injury or sick- the tier 1 benefit is the social security equivalent benefit
ness resulting from active service in one of the following (SSEB) and you treat it for tax purposes as social security
government services. benefits. If you received, repaid, or had tax withheld from
the SSEB portion of tier 1 benefits during 2022, you will
• The armed forces of any country. receive Form RRB-1099, Payments by the Railroad Re-
• The National Oceanic and Atmospheric Administra- tirement Board (or Form RRB-1042S, Statement for Non-
tion. resident Alien Recipients of Payments by the Railroad Re-
tirement Board, if you are a nonresident alien) from the
• The Public Health Service. U.S. Railroad Retirement Board (RRB).
• The Foreign Service.
For more information about the tax treatment of the
SSEB portion of tier 1 benefits and Forms RRB-1099 and
Insurance Premiums for Retired RRB-1042S, see Pub. 915.
Public Safety Officers The second category contains the rest of the tier 1 rail-
If you are an eligible retired public safety officer (law en- road retirement benefits called the non-social security
forcement officer, firefighter, chaplain, or member of a res- equivalent benefit (NSSEB). It also contains any tier 2
cue squad or ambulance crew), you can elect to exclude benefit, vested dual benefit (VDB), and supplemental an-
from income distributions made from your eligible retire- nuity benefit. Treat this category of benefits, shown on
ment plan that are used to pay the premiums for accident Form RRB-1099-R, as an amount received from a quali-
or health insurance or long-term care insurance. The pre- fied employee plan. This allows for the tax-free (nontaxa-
miums can be for coverage for you, your spouse, or de- ble) recovery of employee contributions from the tier 2
pendents. The distribution must be made directly from the benefits and the NSSEB part of the tier 1 benefits. (The
plan to the insurance provider. You can exclude from in- NSSEB and tier 2 benefits, less certain repayments, are
come the smaller of the amount of the insurance premi- combined into one amount called the Contributory
ums or $3,000. You can only make this election for Amount Paid on Form RRB-1099-R.) VDBs and supple-
amounts that would otherwise be included in your income. mental annuity benefits are non-contributory pensions and
The amount excluded from your income can't be used to are fully taxable. See Taxation of Periodic Payments,
claim a medical expense deduction. later, for information on how to report your benefits and
how to recover the employee contributions tax free. Form
An eligible retirement plan is a governmental plan that RRB-1099-R is used for U.S. citizens, resident aliens, and
is a: nonresident aliens.
• Qualified trust,
Nonresident aliens. A nonresident alien is an individual
• Section 403(a) plan, who isn't a citizen or a resident alien of the United States.
• Section 403(b) annuity, or If you are a nonresident alien, you are subject to U.S. tax
on your SSEB portion of tier 1 benefits at a 30% rate, un-
• Section 457(b) plan. less exempt or subject to a lower treaty rate. See Pub.
If you make this election, reduce the otherwise taxable 519, U.S. Tax Guide for Aliens, for more information.
amount of your pension or annuity by the amount exclu- If your rate of tax changed or your country of legal resi-
ded. The amount shown in box 2a of Form 1099-R doesn't dence changed during the tax year, you may receive more
reflect this exclusion. Report your total distributions on than one Form RRB-1042S or Form RRB-1099-R. To de-
Form 1040, 1040-SR, or 1040-NR, line 5a. Report the tax- termine your total benefits paid or repaid and total tax
able amount on Form 1040, 1040-SR, or 1040-NR, withheld for the year, you should add the amounts shown
line 5b. Enter “PSO” next to the appropriate line on which on all forms you received for that year.
you report the taxable amount.
Tax withholding. To request or change your income tax
If you are retired on disability and reporting your disabil- withholding from SSEB payments, U.S. citizens should
ity pension on Form 1040, 1040-SR, or 1040-NR, line 1a, contact the IRS for Form W-4V, Voluntary Withholding

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PAYER’S NAME, STREET ADDRESS, CITY, STATE, AND ZIP CODE ANNUITIES OR PENSIONS BY THE
UNITED STATES RAILROAD RETIREMENT BOARD RAILROAD RETIREMENT BOARD
2022
844 N RUSH ST CHICAGO IL 60611-1275 3. Employee Contributions
PAYER’S FEDERAL IDENTIFYING NO. 36-3314600
1. Claim Number and Payee Code 4. Contributory Amount Paid
COPY B -
2. Recipient’s Number 5. Vested Dual
REPORT THIS INCOME ON
YOUR FEDERAL TAX
Recipient’s Name, Street Address, City, State, and Zip Code 6. Supplemental Annuity RETURN. IF THIS FORM
SHOWS FEDERAL INCOME
7. Total Gross Paid TAX WITHHELD IN BOX 9,
(Sum of boxes 4, 5, and 6) ATTACH THIS COPY TO
8. Repayments YOUR RETURN.
THIS INFORMATION IS BEING
9. Federal Income Tax FURNISHED TO THE INTERNAL
Withheld REVENUE SERVICE.
10. Medicare Premium Total

FORM RRB-1099-R
Request, and file it with the RRB. To elect, revoke, or • Dual railroad retirement entitlement under another
change your income tax withholding from NSSEB, tier 2, RRB claim number;
VDB, and supplemental annuity payments received, use Work deductions;
•
Form RRB W-4P, Withholding Certificate for Railroad Re-
tirement Payments. If you are a nonresident alien or a • Legal process partition deductions;
U.S. citizen living abroad, you should provide Form • Actuarial adjustment;
RRB-1001, Nonresident Questionnaire, to the RRB to fur-
nish citizenship and residency information and to claim • Annuity waiver; or
any treaty exemption from U.S. tax withholding. Nonresi- • Recovery of a current-year overpayment of NSSEB,
dent U.S. citizens can't elect to be exempt from withhold- tier 2, VDB, or supplemental annuity benefits.
ing on payments delivered outside the United States.
The amounts shown on Form RRB-1099-R don't reflect
Help from the RRB. To request an RRB form or to get any special rules, such as capital gain treatment or the
help with questions about an RRB benefit, you should special 10-year tax option for lump-sum payments, or
contact your nearest RRB field office if you reside in the tax-free rollovers. To determine if any of these rules apply
United States (call 877-772-5772 for the nearest field of- to your benefits, see the discussions about them later.
fice) or U.S. Consulate/Embassy if you reside outside the Generally, amounts shown on your Form RRB-1099-R
United States. You can visit the RRB on the Internet at are considered a normal distribution. Use distribution
RRB.gov. code “7” if you are asked for a distribution code. Distribu-
tion codes aren't shown on Form RRB-1099-R.
Form RRB-1099-R. The following discussion explains There are three copies of this form. Copy B is to be in-
the items shown on Form RRB-1099-R. The amounts cluded with your income tax return if federal income tax is
shown on this form are before any deduction for: withheld. Copy C is for your own records. Copy 2 is filed
with your state, city, or local income tax return when re-
• Federal income tax withholding;
quired. See the illustrated Copy B (Form RRB-1099-R),
• Medicare premiums; later.
• Legal process garnishment payments; Each beneficiary will receive their own Form
• Recovery of a prior-year overpayment of an NSSEB, TIP RRB-1099-R. If you receive benefits on more than
tier 2 benefit, VDB, or supplemental annuity benefit; or one railroad retirement record, you may get more
than one Form RRB-1099-R. So that you get your form
• Recovery of Railroad Unemployment Insurance Act timely, make sure the RRB always has your current mail-
benefits received while awaiting payment of your rail- ing address.
road retirement annuity.
The amounts shown on this form are after any offset Box 1—Claim Number and Payee Code. Your claim
for: number is a six- or nine-digit number preceded by an al-
• Social security benefits; phabetical prefix. This is the number under which the RRB
paid your benefits. Your payee code follows your claim
• Age reduction; number and is the last number in this box. It is used by the
• Public service pensions or public disability benefits; RRB to identify you under your claim number. In all your

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correspondence with the RRB, be sure to use the claim Box 6—Supplemental Annuity. This is the gross
number and payee code shown in this box. amount of supplemental annuity benefits paid in 2022,
less any 2022 supplemental annuity benefits you repaid in
Box 2—Recipient's Identification Number. This is
2022. It is fully taxable. Supplemental annuity benefits you
the recipient's U.S. taxpayer identification number (TIN). It
repaid in 2022 for an earlier year or for an unknown year
is the social security number (SSN), individual taxpayer
are shown in box 8.
identification number (ITIN), or employer identification
number (EIN), if known, for the person or estate listed as Box 7—Total Gross Paid. This is the sum of boxes 4,
the recipient. 5, and 6. The amount represents the total pension paid in
2022. Include this amount on Form 1040, 1040-SR, or
If you are a resident or nonresident alien who
1040-NR, line 5a.
TIP must furnish a TIN to the IRS and aren’t eligible to
obtain an SSN, use Form W-7, Application for IRS Box 8—Repayments. This amount represents any
Individual Taxpayer Identification Number, to apply for an NSSEB, tier 2 benefit, VDB, and supplemental annuity
ITIN. The Instructions for Form W-7 explain how and when benefit you repaid to the RRB in 2022 for years before
to apply. 2022 or for unknown years. The amount shown in this box
hasn't been deducted from the amounts shown in boxes
Box 3—Employee Contributions. This is the amount 4, 5, and 6. It only includes repayments of benefits that
of taxes withheld from the railroad employee's earnings were taxable to you. This means it only includes repay-
that exceeds the amount of taxes that would have been ments in 2022 of NSSEB benefits paid after 1985, tier 2
withheld had the earnings been covered under the social and VDB benefits paid after 1983, and supplemental an-
security system. This amount is the employee's cost that nuity benefits paid in any year. If you included the benefits
you use to figure the tax-free part of the NSSEB and tier 2 in your income in the year you received them, you may be
benefit you received (the amount shown in box 4). (For in- able to deduct the repaid amount. For more information
formation on how to figure the tax-free part, see Partly about repayments, see Repayment of benefits received in
Taxable Payments under Taxation of Periodic Payments, an earlier year, later.
later.) The amount shown is the total employee contribu-
You may have repaid an overpayment of benefits
tion amount, not reduced by any amounts that the RRB
by returning a payment, by making a payment, or
calculated as previously recovered. It is the latest amount TIP
by having an amount withheld from your railroad
reported for 2022 and may have increased or decreased
retirement annuity payment.
from a previous Form RRB-1099-R. If this amount has
changed, the change is retroactive. You may need to re-
Box 9—Federal Income Tax Withheld. This is the
figure the tax-free part of your NSSEB/tier 2 benefit for
total federal income tax withheld from your NSSEB, tier 2
2022 and prior tax years. If this box is blank, it means that
benefit, VDB, and supplemental annuity benefit. Include
the amount of your NSSEB and tier 2 payments shown in
this on your income tax return as tax withheld. If you are a
box 4 is fully taxable.
nonresident alien and your tax withholding rate and/or
If you had a previous annuity entitlement that country of legal residence changed during 2022, you will
! ended and you are figuring the tax-free part of receive more than one Form RRB-1099-R for 2022. Deter-
CAUTION your NSSEB/tier 2 benefit for your current annuity mine the total amount of U.S. federal income tax withheld
entitlement, you should contact the RRB for confirmation from your 2022 RRB NSSEB, tier 2, VDB, and supple-
of your correct employee contribution amount. mental annuity payments by adding the amounts in box 9
of all original 2022 Forms RRB-1099-R, or the latest cor-
Box 4—Contributory Amount Paid. This is the gross rected or duplicate Forms RRB-1099-R you receive.
amount of the NSSEB and tier 2 benefit you received in
2022, less any 2022 benefits you repaid in 2022. (Any Box 10—Rate of Tax. If you are a nonresident alien,
benefits you repaid in 2022 for an earlier year or for an un- an entry in this box indicates the rate at which tax was
known year are shown in box 8.) This amount is the total withheld on the NSSEB, tier 2, VDB, and supplemental
contributory pension paid in 2022. It may be partly taxable annuity payments that were paid to you in 2022. If you are
and partly tax free or fully taxable. If you determine you a nonresident alien whose tax was withheld at more than
are eligible to compute a tax-free part, as explained later one rate during 2022, you will receive a separate Form
in Partly Taxable Payments under Taxation of Periodic RRB-1099-R for each rate change during 2022. If you are
Payments, use the latest reported employee contribution taxed as a U.S. citizen or resident alien, this box doesn't
amount shown in box 3 as the cost. apply to you.
Box 5—Vested Dual Benefit. This is the gross Box 11—Country. If you are a nonresident alien, an
amount of VDB payments paid in 2022, less any 2022 entry in this box indicates the country of which you were a
VDB payments you repaid in 2022. It is fully taxable. VDB resident for tax purposes at the time you received railroad
payments you repaid in 2022 for an earlier year or for an retirement payments in 2022. If you are a nonresident
unknown year are shown in box 8. alien who was a resident of more than one country during
2022, you will receive a separate Form RRB-1099-R for
Note. The amounts shown in boxes 4 and 5 may rep- each country of residence during 2022. If you are taxed as
resent payments for 2022 and/or other years after 1983. a U.S. citizen or resident alien, this box doesn't apply to
you.

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Box 12—Medicare Premium Total. This is for infor- Choosing no withholding. You can choose not to have
mation purposes only. The amount shown in this box rep- income tax withheld from retirement plan payments unless
resents the total amount of Part B Medicare premiums de- they are eligible rollover distributions. You can make this
ducted from your railroad retirement annuity payments in choice on Form W-4P for periodic payments or Form
2022. Medicare premium refunds aren't included in the W-4R for nonperiodic payments. This choice generally re-
Medicare total. The Medicare total is normally shown on mains in effect until you revoke it.
Form RRB-1099 (if you are a citizen or resident alien of The payer will ignore your choice not to have tax with-
the United States) or Form RRB-1042S (if you are a non- held if:
resident alien). However, if Form RRB-1099 or Form
• You don't give the payer your SSN (in the required
RRB-1042S isn't required for 2022, then this total will be
manner); or
shown on Form RRB-1099-R. If your Medicare premiums
were deducted from your social security benefits, paid by • The IRS notifies the payer, before the payment is
a third party, refunded to you, and/or you paid the premi- made, that you gave an incorrect SSN.
ums by direct billing, your Medicare total won't be shown To choose not to have tax withheld, a U.S. citizen or
in this box. resident alien must give the payer a home address in the
United States or its possessions. Without that address,
Repayment of benefits received in an earlier year. If
the payer must withhold tax. For example, the payer has
you had to repay any railroad retirement benefits that you
to withhold tax if the recipient has provided a U.S. address
had included in your income in an earlier year because at
for a nominee, trustee, or agent to whom the benefits are
that time you thought you had an unrestricted right to it,
delivered, but hasn't provided their own U.S. home ad-
you can deduct the amount you repaid in the year in which
dress.
you repaid it.
If you don't give the payer a home address in the Uni-
However, if you repaid $3,000, or less, for tax years
ted States or its possessions, you can choose not to have
2018 through 2025, miscellaneous itemized deductions
tax withheld only if you certify to the payer that you aren't a
subject to the 2%-of-adjusted-gross-income limit are sus-
U.S. citizen, a U.S. resident alien, or someone who is sub-
pended and therefore not deductible on Schedule A
ject to section 877 because you expatriated before June
(Form 1040).
17, 2008. See Form 8854 and its instructions for details
If you repaid more than $3,000 in 2022, you can either
about section 877. But if you so certify, you may be sub-
take a deduction for the amount repaid on Schedule A
ject to the 30% flat rate withholding that applies to nonres-
(Form 1040), line 16, or you can take a credit against your
ident aliens. This 30% rate won't apply if you are exempt
tax. For more information, see Repayments in Pub. 525.
or subject to a reduced rate by treaty. For details, see
Pub. 519.
Withholding Tax and Estimated Tax
Periodic payments. Unless you choose no withholding,
Your retirement plan distributions are subject to federal in- your annuity or similar periodic payments (other than eligi-
come tax withholding. However, you can choose not to ble rollover distributions) will be treated as wages for with-
have tax withheld on payments you receive unless they holding purposes. Periodic payments are amounts paid at
are eligible rollover distributions. (These are distributions, regular intervals (such as weekly, monthly, or yearly) for a
described later under Rollovers, that are eligible for roll- period of time greater than 1 year (such as for 15 years or
over treatment but aren't paid directly to another qualified for life). You should give the payer a completed withhold-
retirement plan or to a traditional IRA.) If you choose not to ing certificate (Form W-4P or a similar form provided by
have tax withheld or if you don't have enough tax withheld, the payer). If you don't, tax will be withheld as if you were
you may have to make estimated tax payments. See Esti- married and claiming three withholding allowances.
mated tax, later. Tax will be withheld as if you were single and were
claiming no withholding allowances if:
The withholding rules apply to the taxable part of pay-
ments you receive from: • You don't give the payer your SSN (in the required
manner), or
• An employer pension, annuity, profit-sharing, or stock
bonus plan; • The IRS notifies the payer (before any payment is
made) that you gave an incorrect SSN.
• Any other deferred compensation plan;
You must file a new withholding certificate to change
• A traditional IRA; or
the amount of withholding.
• A commercial annuity.
Nonperiodic distributions. Unless you choose no with-
For this purpose, a commercial annuity means an annuity,
holding, the withholding rate for a nonperiodic distribution
endowment, or life insurance contract issued by an insur-
(a payment other than a periodic payment) that isn't an eli-
ance company.
gible rollover distribution is 10% of the distribution. You
There will be no withholding on any part of a dis- can also ask the payer to withhold an additional amount
TIP tribution where it is reasonable to believe that it using Form W-4R. The part of any loan treated as a distri-
won't be includible in gross income. bution (except an offset amount to repay the loan), ex-
plained later, is subject to withholding under this rule.

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Eligible rollover distribution. If you receive an eligible 1. Any refunded premiums, rebates, dividends, or unre-
rollover distribution, 20% of it will generally be withheld for paid loans that weren't included in your income and
income tax. You can't choose not to have tax withheld that you received by the later of the annuity starting
from an eligible rollover distribution. However, tax won't be date or the date on which you received your first pay-
withheld if you have the plan administrator pay the eligible ment.
rollover distribution directly to another qualified plan or an
2. Any other tax-free amounts you received under the
IRA in a direct rollover. For more information about eligible
contract or plan by the later of the dates in (1).
rollover distributions, see Rollovers, later.
3. If you must use the Simplified Method for your annuity
Estimated tax. Your estimated tax is the total of your ex- payments, the tax-free part of any single-sum pay-
pected income tax, self-employment tax, and certain other ment received in connection with the start of the an-
taxes for the year, minus your expected credits and with- nuity payments, regardless of when you received it.
held tax. Generally, you must make estimated tax pay- (See Simplified Method, later, for information on its re-
ments for 2023 if you expect to owe at least $1,000 in tax quired use.)
(after subtracting your withholding and credits) and you
expect your withholding and credits to be less than the 4. If you use the General Rule for your annuity pay-
smaller of: ments, the value of the refund feature in your annuity
contract. (See General Rule, later, for information on
1. 90% of the tax to be shown on your 2023 return, or its use.) Your annuity contract has a refund feature if
2. 100% of the tax shown on your 2022 return. the annuity payments are for your life (or the lives of
you and your survivor) and payments in the nature of
If your adjusted gross income for 2022 was more than a refund of the annuity's cost will be made to your
$150,000 ($75,000 if your filing status for 2023 is married beneficiary or estate if all annuitants die before a sta-
filing separately), substitute 110% for 100% in (2) above. ted amount or a stated number of payments are
For more information, see Pub. 505, Tax Withholding and made. For more information, see Pub. 939.
Estimated Tax.
The tax treatment of the items described in (1) through (3)
In figuring your withholding or estimated tax, re- is discussed later under Taxation of Nonperiodic Pay-
TIP member that a part of your monthly social security ments.
or equivalent tier 1 railroad retirement benefits
may be taxable. See Pub. 915. You can choose to have Form 1099-R. If you began receiving periodic
income tax withheld from those benefits. Use Form W-4V TIP payments of a life annuity in 2022, the payer
to make this choice. should show your total contributions to the plan in
box 9b of your 2022 Form 1099-R.

Annuity starting date defined. Your annuity starting
Cost (Investment in the date is the later of the first day of the first period for which
you received a payment or the date the plan's obligations
Contract) became fixed.

Distributions from your pension or annuity plan may in- Example. On January 1, you completed all your pay-
clude amounts treated as a recovery of your cost (invest- ments required under an annuity contract providing for
ment in the contract). If any part of a distribution is treated monthly payments starting on August 1 for the period be-
as a recovery of your cost under the rules explained in this ginning July 1. The annuity starting date is July 1. This is
publication, that part is tax free. Therefore, the first step in the date you use in figuring the cost of the contract and
figuring how much of a distribution is taxable is to deter- selecting the appropriate number from Table 1 for line 3 of
mine the cost of your pension or annuity. the Simplified Method Worksheet.

In general, your cost is your net investment in the con- Designated Roth accounts. Your cost in these ac-
tract as of the annuity starting date (or the date of the dis- counts is your designated Roth contributions that were in-
tribution if earlier). To find this amount, you must first fig- cluded in your income as wages subject to applicable
ure the total premiums, contributions, or other amounts withholding requirements. Your cost will also include any
you paid. This includes the amounts your employer con- in-plan Roth rollovers you included in income.
tributed that were taxable to you when paid. However, see
Foreign employment contributions, later. It doesn't include Foreign employment contributions. If you worked
amounts withheld from your pay on a tax-deferred basis abroad, your cost may include contributions by your em-
(money that was taken out of your gross pay before taxes ployer to the retirement plan, but only if those contribu-
were deducted). It also doesn't include amounts you con- tions would be excludable from your gross income had
tributed for health and accident benefits (including any ad- they been paid directly to you as compensation. The con-
ditional premiums paid for double indemnity or disability tributions that apply are:
benefits).
1. Contributions before 1963 by your employer,
From this total cost you must subtract the following
amounts.

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2. Contributions after 1962 by your employer if the con- Period of participation. The 5-tax-year period of par-
tributions would be excludable from your gross in- ticipation is the 5-tax-year period beginning with the first
come (not including the foreign earned income exclu- tax year for which the participant made a designated Roth
sion) had they been paid directly to you, or contribution to the plan. Therefore, for designated Roth
contributions made for 2022, the first year for which a
3. Contributions after 1996 by your employer if you per-
qualified distribution can be made is 2027.
formed the services of a foreign missionary (a duly or-
However, if a direct rollover is made to the plan from a
dained, commissioned, or licensed minister of a
designated Roth account under another plan, the
church or a lay person) but only if the contributions
5-tax-year period for the recipient plan begins with the first
would be excludable from your gross income had they
tax year for which the participant first had designated Roth
been paid directly to you.
contributions made to the other plan.
Foreign employment contributions while a nonres- Your 401(k), 403(b), or 457(b) plan may permit you to
ident alien. In determining your cost, special rules apply roll over amounts from those plans to a designated Roth
if you are a U.S. citizen or resident alien who received dis- account within the same plan. This is known as an in-plan
tributions in 2022 from a plan to which contributions were Roth rollover. For more details, see In-plan Roth rollovers,
made while you were a nonresident alien. Your contribu- later.
tions and your employer's contributions aren't included in
your cost if the contribution: Fully Taxable Payments
• Was made based on compensation which was for
services performed outside the United States while The pension or annuity payments that you receive are fully
you were a nonresident alien; and taxable if you have no cost in the contract because any of
the following situations applies to you. However, see In-
• Wasn't subject to income tax under the laws of the surance Premiums for Retired Public Safety Officers, ear-
United States or any foreign country, but only if the lier.
contribution would have been subject to income tax if
paid as cash compensation when the services were • You didn't pay anything or aren't considered to have
performed. paid anything for your pension or annuity. Amounts
withheld from your pay on a tax-deferred basis aren't
considered part of the cost of the pension or annuity
payment.
Taxation of Periodic Payments
• Your employer didn't withhold contributions from your
This section explains how the periodic payments you re- salary.
ceive from a pension or annuity plan are taxed. Periodic • You got back all of your contributions tax free in prior
payments are amounts paid at regular intervals (such as years. However, see Exclusion not limited to cost un-
weekly, monthly, or yearly) for a period of time greater der Partly Taxable Payments, later.
than 1 year (such as for 15 years or for life). These pay-
ments are also known as amounts received as an annuity. Report the total amount you received on Form 1040,
If you receive an amount from your plan that isn't a peri- 1040-SR, or 1040-NR, line 5b. You should make no entry
odic payment, see Taxation of Nonperiodic Payments, on Form 1040, 1040-SR, or 1040-NR, line 5a.
later.
Deductible voluntary employee contributions. Distri-
In general, you can recover the cost of your pension or butions you receive that are based on your accumulated
annuity tax free over the period you are to receive the pay- deductible voluntary employee contributions are generally
ments. The amount of each payment that is more than the fully taxable in the year distributed to you. Accumulated
part that represents your cost is taxable. However, see In- deductible voluntary employee contributions include net
surance Premiums for Retired Public Safety Officers, ear- earnings on the contributions. If distributed as part of a
lier. lump sum, they don't qualify for the 10-year tax option or
capital gain treatment, explained later.
Designated Roth accounts. If you receive a qualified
distribution from a designated Roth account, the distribu-
tion isn't included in your gross income. This applies to Partly Taxable Payments
both your cost in the account and income earned on that
If you have a cost to recover from your pension or annuity
account. A qualified distribution is generally a distribu-
plan (see Cost (Investment in the Contract), earlier), you
tion that is:
can exclude part of each annuity payment from income as
• Made after a 5-tax-year period of participation; and a recovery of your cost. This tax-free part of the payment
• Made on or after the date you reach age 59 / , made 1 2 is figured when your annuity starts and remains the same
to a beneficiary or your estate on or after your death, each year even if the amount of the payment changes.
or attributable to your being disabled. The rest of each payment is taxable. However, see Insur-
ance Premiums for Retired Public Safety Officers, earlier.
If the distribution isn't a qualified distribution, the rules
discussed in this section apply. The designated Roth
account is treated as a separate contract.

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You figure the tax-free part of the payment using one of deduction for your unrecovered cost of $2,400 ($12,000 –
the following methods. $9,600) can be taken on your final return.
• Simplified Method. You must generally use this Exclusion not limited to cost. If your annuity starting
method if your annuity is paid under a qualified plan (a date is before 1987, you can continue to take your
qualified employee plan a qualified employee annuity, , monthly exclusion for as long as you receive your annuity.
or a tax-sheltered annuity plan or contract). You can't If you chose a joint and survivor annuity, your survivor can
use this method if your annuity is paid under a non- continue to take the survivor's exclusion figured as of the
qualified plan. annuity starting date. The total exclusion may be more
• General Rule. You must use this method if your an- than your cost.
nuity is paid under a nonqualified plan. Generally, you
can't use this method if your annuity is paid under a Simplified Method
qualified plan. However, see Qualified plan annuity
starting before November 19, 1996, later, for excep- Under the Simplified Method, you figure the tax-free part
tions to this rule. of each annuity payment by dividing your cost by the total
number of anticipated monthly payments. For an annuity
You determine which method to use when you first begin that is payable for the lives of the annuitants, this number
receiving your annuity, and you continue using it each is based on the annuitants' ages on the annuity starting
year that you recover part of your cost. date and is determined from a table. For any other annu-
ity, this number is the number of monthly annuity pay-
If you had more than one partly taxable pension or an-
ments under the contract.
nuity, figure the tax-free part and the taxable part of each
separately. Who must use the Simplified Method. You must use
the Simplified Method if your annuity starting date is after
Qualified plan annuity starting before November 19,
November 18, 1996, and you meet both of the following
1996. If your annuity is paid under a qualified plan and
conditions.
your annuity starting date (defined earlier under Cost (In-
vestment in the Contract)) is after July 1, 1986, and before 1. You receive your pension or annuity payments from
November 19, 1996, you could have chosen to use either any of the following plans.
the Simplified Method or the General Rule. If your annuity
starting date is before July 2, 1986, you use the General a. A qualified employee plan.
Rule unless your annuity qualified for the 3-year Rule. If b. A qualified employee annuity.
you used the 3-year Rule (which was repealed for annui-
ties starting after July 1, 1986), your annuity payments are c. A tax-sheltered annuity plan (403(b) plan).
generally now fully taxable. 2. On your annuity starting date, at least one of the fol-
lowing conditions applies to you.
Exclusion limit. Your annuity starting date determines
the total amount of annuity payments that you can exclude a. You are under age 75.
from income over the years. Once your annuity starting
b. You are entitled to less than 5 years of guaranteed
date is determined, it doesn't change. If you calculate the
payments.
taxable portion of your annuity payments using the Simpli-
fied Method Worksheet, the annuity starting date deter- Guaranteed payments. Your annuity contract pro-
mines the recovery period for your cost. That recovery pe- vides guaranteed payments if a minimum number of pay-
riod begins on your annuity starting date and isn't affected ments or a minimum amount (for example, the amount of
by the date you first complete the worksheet. your investment) is payable even if you and any survivor
annuitant don't live to receive the minimum. If the mini-
Exclusion limited to cost. If your annuity starting
mum amount is less than the total amount of the pay-
date is after 1986, the total amount of annuity income that
ments you are to receive, barring death, during the first 5
you can exclude over the years as a recovery of the cost
years after payments begin (figured by ignoring any pay-
can't exceed your total cost. Any unrecovered cost at your
ment increases), you are entitled to less than 5 years of
(or the last annuitant's) death is allowed as an itemized
guaranteed payments.
deduction on the final return of the decedent.
Annuity starting before November 19, 1996. If your
Example 1. Your annuity starting date is after 1986, annuity starting date is after July 1, 1986, and before No-
and you exclude $100 a month ($1,200 a year) under the vember 19, 1996, and you chose to use the Simplified
Simplified Method. The total cost of your annuity is Method, you must continue to use it each year that you re-
$12,000. Your exclusion ends when you have recovered cover part of your cost. You could have chosen to use the
your cost tax free, that is, after 10 years (120 months). Af- Simplified Method if your annuity is payable for your life
ter that, your annuity payments are generally fully taxable. (or the lives of you and your survivor annuitant) and you
met both of the conditions listed earlier under Who must
Example 2. The facts are the same as in Example 1, use the Simplified Method.
except you die (with no surviving annuitant) after the
eighth year of retirement. You have recovered tax free
only $9,600 (8 × $1,200) of your cost. An itemized

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Who can't use the Simplified Method. You can't use Line 6. The amount on line 6 should include all
the Simplified Method if you receive your pension or annu- amounts that could have been recovered in prior years. If
ity from a nonqualified plan or otherwise don't meet the you didn't recover an amount in a prior year, you may be
conditions described in the preceding discussion. See able to amend your returns for the affected years.
General Rule, later.
Example. Bill Smith, age 65, began receiving retire-
How to use the Simplified Method. Complete Work- ment benefits in 2022 under a joint and survivor annuity.
sheet A near the end of this publication to figure your taxa- Bill's annuity starting date is January 1, 2022. The benefits
ble annuity for 2022. Be sure to keep the completed work- are to be paid for the joint lives of Bill and his spouse, age
sheet; it will help you figure your taxable annuity next year. 65. Bill had contributed $31,000 to a qualified plan and
To complete line 3 of the worksheet, you must deter- had received no distributions before the annuity starting
mine the total number of expected monthly payments for date. Bill is to receive a retirement benefit of $1,200 a
your annuity. How you do this depends on whether the an- month, and his spouse is to receive a monthly survivor
nuity is for a single life, multiple lives, or a fixed period. For benefit of $600 upon Bill's death.
this purpose, treat an annuity that is payable over the life Bill must use the Simplified Method to figure his taxable
of an annuitant as payable for that annuitant's life even if annuity because his payments are from a qualified plan
the annuity has a fixed-period feature or also provides a and he is under age 75. Because his annuity is payable
temporary annuity payable to the annuitant's child under over the lives of more than one annuitant, he uses his and
age 25. his spouse's combined ages and Table 2 at the bottom of
Worksheet A in completing line 3 of the worksheet. His
You don't need to complete line 3 of the work-
completed worksheet is shown later.
TIP sheet or make the computation on line 4 if you re-
Bill's tax-free monthly amount is $100 ($31,000 ÷ 310)
ceived annuity payments last year and used last
as shown on line 4 of the worksheet. Upon Bill's death, if
year's worksheet to figure your taxable annuity. Instead,
Bill hasn't recovered the full $31,000 investment, his
enter the amount from line 4 of last year's worksheet on
spouse will also exclude $100 from her $600 monthly pay-
line 4 of this year's worksheet.
ment. The full amount of any annuity payments received
Single-life annuity. If your annuity is payable for your after 310 payments are paid must be included in gross in-
life alone, use Table 1 at the bottom of the worksheet to come.
determine the total number of expected monthly pay- If Bill and his spouse die before 310 payments are
ments. Enter on line 3 the number shown for your age on made, an itemized deduction will be allowed for the unrec-
your annuity starting date. This number will differ depend- overed cost on the final income tax return of the last to
ing on whether your annuity starting date is before No- die.

vember 19, 1996, or after November 18, 1996. Multiple annuitants. If you and one or more other annui-
Multiple-lives annuity. If your annuity is payable for tants receive payments at the same time, you exclude
the lives of more than one annuitant, use Table 2 at the from each annuity payment a pro rata share of the
bottom of the worksheet to determine the total number of monthly tax-free amount. Figure your share by taking the
expected monthly payments. Enter on line 3 the number following steps.
shown for the annuitants' combined ages on the annuity 1. Complete your worksheet through line 4 to figure the
starting date. For an annuity payable to you as the primary monthly tax-free amount.
annuitant and to more than one survivor annuitant, com-
bine your age and the age of the youngest survivor annui- 2. Divide the amount of your monthly payment by the to-
tant. For an annuity that has no primary annuitant and is tal amount of the monthly payments to all annuitants.
payable to you and others as survivor annuitants, combine
3. Multiply the amount on line 4 of your worksheet by the
the ages of the oldest and youngest annuitants. Don't treat
amount figured in (2) above. The result is your share
as a survivor annuitant anyone whose entitlement to pay-
of the monthly tax-free amount.
ments depends on an event other than the primary annui-
tant's death. Replace the amount on line 4 of the worksheet with the
However, if your annuity starting date is before 1998, result in (3) above. Enter that amount on line 4 of your
don't use Table 2 and don't combine the annuitants' ages. worksheet each year.
Instead, you must use Table 1 at the bottom of the work-
sheet and enter on line 3 the number shown for the pri- General Rule
mary annuitant's age on the annuity starting date. This
number will differ depending on whether your annuity Under the General Rule, you determine the tax-free part of
starting date is before November 19, 1996, or after No- each annuity payment based on the ratio of the cost of the
vember 18, 1996. contract to the total expected return. Expected return is
the total amount you and other eligible annuitants can ex-
Fixed-period annuity. If your annuity doesn't depend pect to receive under the contract. To figure it, you must
in whole or in part on anyone's life expectancy, the total use life expectancy (actuarial) tables prescribed by the
number of expected monthly payments to enter on line 3 IRS.
of the worksheet is the number of monthly annuity pay-
ments under the contract.

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Worksheet A. Simplified Method Worksheet for Bill Smith
                                                                                    Keep for Your Records
1. Enter the total pension or annuity payments received this year. Also, add this amount to the total 
    for Form 1040, 1040-SR, or 1040-NR, line 5a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               1.  $ 14,400
2. Enter your cost in the plan (contract) at the annuity starting date plus any death benefit 
    exclusion.* See Cost (Investment in the Contract), earlier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      2.  31,000
    Note: If your annuity starting date was before this year and you completed this worksheet last 
    year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if 
    the amount of your pension or annuity has changed). Otherwise, go to line 3.
3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 
    1997 and the payments are for your life and that of your beneficiary, enter the appropriate 
    number from Table 2 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   3.  310
4. Divide line 2 by the number on line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      4.  100
5. Multiply line 4 by the number of months for which this year's payments were made. If your 
    annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, 
    and 11. Otherwise, go to line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 5.  1,200
6. Enter any amount previously recovered tax free in years after 1986. This is the amount shown 
    on line 10 of your worksheet for last year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        6.  -0-
7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              7.  31,000
8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  8.  1,200
9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. 
    Also, add this amount to the total for Form 1040, 1040-SR, or 1040-NR, line 5b. Note: If your 
    Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. If you 
    are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers 
    before entering an amount on your tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              9.  $ 13,200
10. Was your annuity starting date before 1987?
     Yes. STOP. Don't complete the rest of this worksheet.
     No. Add lines 6 and 8. This is the amount you have recovered tax free through 2022. You will 
    need this number if you need to fill out this worksheet next year . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                         10. 1,200
11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you won't have to 
    complete this worksheet next year. The payments you receive next year will generally be fully 
    taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. $ 29,800

* A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996.

                                             Table 1 for Line 3 Above
                                                     AND your annuity starting date was—
                    IF the age at annuity    BEFORE November 19,        AFTER November 18,
                    starting date was...       1996, enter on line 3... 1996, enter on line 3...
                    55 or under                      300                            360
                    56–60                            260                            310
                    61–65                            240                            260
                    66–70                            170                            210
                    71 or older                      120                            160

                                             Table 2 for Line 3 Above
                    IF the combined ages at                                     THEN enter
                    annuity starting date were...                               on line 3...
                    110 or under                                                    410
                    111–120                                                         360
                    121–130                                                         310
                    131–140                                                         260
                    141 or older                                                    210

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Who must use the General Rule. You must use the the excess is taxable to you. To correct an excess, your
General Rule if you receive pension or annuity payments plan may distribute it to you (along with any income
from a: earned on the excess). Although the plan reports the cor-
rective distributions on Form 1099-R, the distribution isn't
• Nonqualified plan (such as a private annuity, a pur-
treated as a nonperiodic distribution from the plan. It isn't
chased commercial annuity, or a nonqualified em-
subject to the allocation rules explained in the following
ployee plan), or
discussion, it can't be rolled over into another plan, and it
• Qualified plan if you are age 75 or older on your annu- isn't subject to the additional tax on early distributions.
ity starting date and your annuity payments are guar-
If your retirement plan made a corrective distribu-
anteed for at least 5 years.
TIP tion of excess amounts (excess deferrals, excess
Annuity starting before November 19, 1996. If your contributions, or excess annual additions), your
annuity starting date is after July 1, 1986, and before No- Form 1099-R should have the code “8,” “B,” “P,” or “E” in
vember 19, 1996, you had to use the General Rule for ei- box 7.
ther circumstance just described. You also had to use it
For information on plan contribution limits and how to
for any fixed-period annuity. If you didn't have to use the
report corrective distributions of excess contributions, see
General Rule, you could have chosen to use it. If your an-
Retirement Plan Contributions under Employee Compen-
nuity starting date is before July 2, 1986, you had to use
sation in Pub. 525.
the General Rule unless you could use the 3-year Rule.
If you had to use the General Rule (or chose to use it),
you must continue to use it each year that you recover Figuring the Taxable Amount
your cost.
How you figure the taxable amount of a nonperiodic distri-
Who can't use the General Rule. You can't use the bution depends on whether it is made before the annuity
General Rule if you receive your pension or annuity from a starting date, or on or after the annuity starting date. If it is
qualified plan and none of the circumstances described in made before the annuity starting date, its tax treatment
the preceding discussions apply to you. See Simplified also depends on whether it is made under a qualified or
Method, earlier. nonqualified plan. If it is made under a nonqualified plan,
its tax treatment depends on whether it fully discharges
More information. For complete information on using the contract, is received under certain life insurance or en-
the General Rule, including the actuarial tables you need, dowment contracts, or is allocable to an investment you
see Pub. 939. made before August 14, 1982.
You may be able to roll over the taxable amount
TIP of a nonperiodic distribution from a qualified re-
Taxation of Nonperiodic tirement plan into another qualified retirement
plan or a traditional IRA tax free. See Rollovers, later. If
Payments you don't make a tax-free rollover and the distribution
qualifies as a lump-sum distribution, you may be able to
This section of the publication explains how any nonperi- elect an optional method of figuring the tax on the taxable
odic distributions you receive under a pension or annuity amount. See Lump-Sum Distributions, later.
plan are taxed. Nonperiodic distributions are also known
as amounts not received as an annuity. They include all
Annuity starting date. The annuity starting date is either
payments other than periodic payments and corrective
the first day of the first period for which you receive an an-
distributions.
nuity payment under the contract or the date on which the
For example, the following items are treated as non- obligation under the contract becomes fixed, whichever is
periodic distributions. later.

• Cash withdrawals. Distributions of employer securities. If you receive a
• Distributions of current earnings (dividends) on your distribution of employer securities from a qualified retire-
investment. However, don't include these distributions ment plan, you may be able to defer the tax on the net un-
in your income to the extent the insurer keeps them to realized appreciation (NUA) in the securities. The NUA is
pay premiums or other consideration for the contract. the net increase in the securities' value while they were in
the trust. This tax deferral applies to distributions of the
• Certain loans. See Loans Treated as Distributions, employer corporation's stocks, bonds, registered deben-
later. tures, and debentures with interest coupons attached.
• The value of annuity contracts transferred without full If the distribution is a lump-sum distribution, tax is de-
and adequate consideration. See Transfers of Annuity ferred on all of the NUA unless you choose to include it in
Contracts, later. your income for the year of the distribution.
A lump-sum distribution for this purpose is the distribu-
Corrective distributions of excess plan contribu- tion or payment of a plan participant's entire balance
tions. Generally, if the contributions made for you during
the year to certain retirement plans exceed certain limits,

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(within a single tax year) from all of the employer's quali- a nonperiodic distribution, you can exclude part of the
fied plans of one kind (pension, profit-sharing, or stock bo- nonperiodic distribution from gross income. The part you
nus plans), but only if paid: can exclude is equal to your cost in the contract reduced
by any tax-free amounts you previously received under
• Because of the plan participant's death;
the contract, multiplied by a fraction. The numerator is the
• After the participant reaches age 59 / ;1 2 reduction in each annuity payment because of the non-
• Because the participant, if an employee, separates periodic distribution. The denominator is the full unre-
from service; or duced amount of each annuity payment originally provi-
ded for.
• After the participant, if a self-employed individual, be-
comes totally and permanently disabled. Single-sum in connection with the start of annuity
If you choose to include NUA in your income for payments. If you receive a single-sum payment on or af-
TIP the year of the distribution and the participant was ter your annuity starting date in connection with the start of
born before January 2, 1936, you may be able to annuity payments for which you must use the Simplified
figure the tax on the NUA using the optional methods de- Method, treat the single-sum payment as if it were re-
scribed under Lump-Sum Distributions, later. ceived before your annuity starting date. (See Simplified
Method under Taxation of Periodic Payments, earlier, for
If the distribution isn't a lump-sum distribution, tax is de- information on its required use.) Follow the rules dis-
ferred only on the NUA resulting from employee contribu- cussed under Distribution Before Annuity Starting Date
tions other than deductible voluntary employee contribu- From a Qualified Plan, later.
tions.
The NUA on which tax is deferred should be shown in Distribution in full discharge of contract. You may re-
box 6 of the Form 1099-R you receive from the payer of ceive an amount on or after the annuity starting date that
the distribution. fully satisfies the payer's obligation under the contract.
When you sell or exchange employer securities with The amount may be a refund of what you paid for the con-
tax-deferred NUA, any gain is long-term capital gain up to tract or for the complete surrender, redemption, or matur-
the amount of the NUA that isn’t included in your basis in ity of the contract. Include the amount in gross income
the employer securities. Any gain that is more than the only to the extent that it exceeds the remaining cost of the
NUA is long-term or short-term gain, depending on how contract.
long you held the securities after the distribution.
Your basis in the employer securities is the total of the Distribution Before Annuity Starting Date
following amounts. From a Qualified Plan
• Your contributions to the plan that are attributable to
the securities. If you receive a nonperiodic distribution before the annuity
starting date from a qualified retirement plan, you can
• Your employer's contributions that were taxed as ordi- generally allocate only part of it to the cost of the contract.
nary income in the year the securities were distrib- You exclude from your gross income the part that you allo-
uted. cate to the cost. You include the remainder in your gross
• Your NUA in the securities that is attributable to em- income.
ployer contributions and taxed as ordinary income in
the year the securities were distributed. For this purpose, a qualified retirement plan is a:
• Qualified employee plan (or annuity contract pur-
How to report. Enter the total amount of a nonperiodic
chased by such a plan),
distribution on Form 1040, 1040-SR, or 1040-NR, line 5a.
Enter the taxable amount of the distribution on Form 1040, • Qualified employee annuity plan, or
1040-SR, or 1040-NR, line 5b. However, if you make a • Tax-sheltered annuity plan (403(b) plan).
tax-free rollover or elect an optional method of figuring the
tax on a lump-sum distribution, see How to report in the Use the following formula to figure the tax-free amount
discussions of those tax treatments, later. of the distribution.

Distribution On or After Annuity Starting
Date Cost of contract Tax-free
Amount
x =
If you receive a nonperiodic payment from your annuity received Account balance amount
contract on or after the annuity starting date, you must
generally include all of the payment in gross income. For For this purpose, your account balance includes only
example, a cost-of-living increase in your pension after amounts to which you have a nonforfeitable right (a right
the annuity starting date is an amount not received as an that can't be taken away).
annuity and, as such, is fully taxable.
Example. Ann Brown received a $50,000 distribution
Reduction in subsequent payments. If the annuity from her retirement plan before her annuity starting date.
payments you receive are reduced because you received She had $10,000 invested (cost) in the plan. Her account

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balance was $100,000. She can exclude $5,000 of the the issuer. You include in your gross income the smaller
$50,000 distribution, figured as follows: of:
• The nonperiodic distribution, or
$10,000 • The amount by which the cash value of the contract
$50,000 x = $5,000 (figured without considering any surrender charge) im-
$100,000 mediately before you receive the distribution exceeds
your investment in the contract at that time.
Defined contribution plan. A defined contribution plan
is a plan in which you have an individual account. Your Example. You bought an annuity from an insurance
benefits are based only on the amount contributed to the company. Before the annuity starting date under your an-
account and the income, gains or losses, etc., which may nuity contract, you received a $7,000 distribution. At the
be allocated to that account. Under a defined contribution time of the distribution, the annuity had a cash value of
plan, your contributions (and income allocable to those $16,000 and your investment in the contract was $10,000.
contributions) may be treated as a separate contract for The distribution is allocated first to earnings, so you must
figuring the taxable part of any distribution. The employer include $6,000 ($16,000 − $10,000) in your gross income.
contributions (and income allocable to those contribu- The remaining $1,000 ($7,000 − $6,000) is a tax-free re-
tions) wouldn't be considered part of that separate con- turn of part of your investment.
tract.
Exception to allocation rule. Certain nonperiodic distri-
Example. Ryan participates in a defined contribution butions received before the annuity starting date aren't
plan that treats employee contributions and earnings allo- subject to the allocation rule in the preceding discussion.
cable to them as a separate contract. He received a Instead, you include the amount of the payment in gross
non-annuity distribution of $5,000 before his annuity start- income only to the extent that it exceeds the cost of the
ing date. He had made after-tax contributions of $10,000. contract.
The earnings allocable to his contributions were $2,500. This exception applies to the following distributions.
His employer also contributed $10,000. The earnings allo-
cable to the employer contributions were $2,500. • Distributions in full discharge of a contract that you re-
ceive as a refund of what you paid for the contract or
To determine the tax-free amount of Ryan's distribu-
for the complete surrender, redemption, or maturity of
tion, use the same formula shown earlier. However, be-
the contract.
cause employee contributions are treated as a separate
contract, the account balance would be the total of Ryan's • Distributions from life insurance or endowment con-
contributions and allocable earnings. tracts (other than modified endowment contracts, as
Thus, the tax-free amount would be $5,000 × ($10,000 defined in section 7702A of the Internal Revenue
÷ $12,500) = $4,000. The taxable amount would be Code) that aren't received as an annuity under the
$1,000 ($5,000 − $4,000). contracts.
If the employee contributions weren't treated as a sepa- Distributions under contracts entered into before Au-
•
rate contract, the tax-free amount would be $2,000 gust 14, 1982, to the extent that they are allocable to
($5,000 × ($10,000 ÷ $25,000)) and the taxable amount your investment before August 14, 1982.
would be $3,000 ($5,000 − $2,000).
If you bought an annuity contract before August 14,
Plans that permitted withdrawal of employee contri- 1982, and made investments both before and after August
butions. If you contributed before 1987 to a pension plan 14, 1982, the distributed amounts are allocated to your in-
that, as of May 5, 1986, permitted you to withdraw your vestment or to earnings in the following order.
contributions before your separation from service, any dis- 1. The part of your investment that was made before Au-
tribution before your annuity starting date is tax free to the gust 14, 1982. This part of the distribution is tax free.
extent that it, when added to earlier distributions received
after 1986, doesn't exceed your cost as of December 31, 2. The earnings on the part of your investment that was
1986. Apply the allocation described in the preceding dis- made before August 14, 1982. This part of the distri-
cussion only to any excess distribution. bution is taxable.
3. The earnings on the part of your investment that was
Distribution Before Annuity Starting Date made after August 13, 1982. This part of the distribu-
From a Nonqualified Plan tion is taxable.
If you receive a nonperiodic distribution before the annuity 4. The part of your investment that was made after Au-
starting date from a plan other than a qualified retirement gust 13, 1982. This part of the distribution is tax free.
plan (nonqualified plan), it is allocated first to earnings (the The taxable portion of distributions from nonquali-
taxable part) and then to the cost of the contract (the ! fied plans is subject to the net investment income
tax-free part). This allocation rule applies, for example, to CAUTION tax. See the Instructions for Form 8960.
a commercial annuity contract you bought directly from
Distribution of U.S. savings bonds. If you receive U.S.
savings bonds in a taxable distribution from a retirement

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or profit-sharing plan, report the value of the bonds at the on the date you took out the new loan. If this amount is
time of distribution as income. The value of the bonds in- zero or less, ignore it.
cludes accrued interest. When you cash the bonds, your
Substantially level payments. To qualify for the ex-
Form 1099-INT will show the total interest accrued, includ-
ception to the loan-as-distribution rule, the loan must re-
ing the part you reported when the bonds were distributed
quire substantially level payments at least quarterly over
to you. For information on how to adjust your interest in-
the life of the loan. If the loan is from a designated Roth
come for U.S. savings bond interest you previously repor-
account, the payments must be satisfied separately for
ted, see How To Report Interest Income in chapter 1 of
that part of the loan and for the part of the loan from other
Pub. 550, Investment Income and Expenses.
accounts under the plan. This level payment requirement
doesn't apply to the period in which you are on a leave of
Loans Treated as Distributions absence without pay or with a rate of pay that is less than
the required installment. Generally, this leave of absence
If you borrow money from your retirement plan, you must must not be longer than 1 year. You must repay the loan
treat the loan as a nonperiodic distribution from the plan within 5 years from the date of the loan (unless the loan
unless it qualifies for the exception to this loan-as-distribu- was used to acquire your main home). Your installment
tion rule explained later. This treatment also applies to any payments after the leave ends must not be less than your
loan under a contract purchased under your retirement original payments.
plan, and to the value of any part of your interest in the However, if your plan suspends your loan payments for
plan or contract that you pledge or assign (or agree to any part of the period during which you are in the uni-
pledge or assign). It applies to loans from both qualified formed services, you won't be treated as having received
and nonqualified plans, including commercial annuity con- a distribution even if the suspension is for more than 1
tracts you purchase directly from the issuer. Further, it ap- year and the term of the loan is extended. The loan pay-
plies if you renegotiate, extend, renew, or revise a loan ments must resume upon completion of such period and
that qualified for the exception below if the altered loan the loan must be repaid in substantially level installments
doesn't qualify. In that situation, you must treat the out- within 5 years from the date of the loan (unless the loan
standing balance of the loan as a distribution on the date was used to acquire your main home) plus the period of
of the transaction. suspension.

You determine how much of the loan is taxable using Example 1. On May 1, 2022, you borrowed $40,000
the allocation rules for nonperiodic distributions discussed from your retirement plan. The loan was to be repaid in
under Figuring the Taxable Amount, earlier. The taxable level monthly installments over 5 years. The loan wasn't
part may be subject to the additional tax on early distribu- used to acquire your main home. You make nine monthly
tions. It isn't an eligible rollover distribution and doesn't payments and start an unpaid leave of absence that lasts
qualify for the 10-year tax option. for 12 months. You weren't in the uniformed services dur-
ing this period. After the leave period ends and you re-
Exception for qualified plan, 403(b) plan, and gov- sume active employment, you resume making repay-
ernmental plan loans. At least part of certain loans un- ments on the loan. You must repay this loan by April 30,
der a qualified employee plan, qualified employee annuity, 2027 (5 years from the date of this loan). You can in-
tax-sheltered annuity (403(b) plan), or governmental plan crease your monthly installments or you can make the
isn't treated as a distribution from the plan. This exception original monthly installments and on April 30, 2027, pay
to the loan-as-distribution rule applies only to a loan that the balance.
either:
• Is used to acquire your main home, or Example 2. The facts are the same as in Example 1,
except that you are on a leave of absence performing
• Must be repaid within 5 years. service in the uniformed services for 2 years. The loan
If a loan qualifies for this exception, you must treat it as payments were suspended for that period. You must re-
a nonperiodic distribution only to the extent that the loan, sume making loan payments at the end of that period and
when added to the outstanding balances of all your loans the loan must be repaid by April 30, 2029 (5 years from
from all plans of your employer (and certain related em- the date of the loan plus the period of suspension, which
ployers, defined later), exceeds the lesser of: is 2 years in this example).
• $50,000; or Related employers and related plans. In determin-
ing loan balances for purposes of applying the exception
• Half the present value (but not less than $10,000) of
to the loan-as-distribution rule, you must add the balances
your nonforfeitable accrued benefit under the plan,
of all your loans from all plans of your employer and from
determined without regard to any accumulated deduc-
all plans of your employers who are treated as a single
tible employee contributions.
employer. Treat separate employers' plans as plans of a
You must reduce the $50,000 amount if you already single employer if they are treated that way under other
had an outstanding loan from the plan during the 1-year qualified retirement plan rules because the employers are
period ending the day before you took out the loan. The related.
amount of the reduction is your highest outstanding loan
balance during that period minus the outstanding balance

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Employers are related if they are: This rule doesn't apply to transfers between spouses or
• Members of a controlled group of corporations, transfers between former spouses incident to a divorce.

• Businesses under common control, or Tax-free exchange. No gain or loss is recognized on an
exchange of an annuity contract for another annuity con-
• Members of an affiliated service group.
tract if the insured or annuitant remains the same. How-
An affiliated service group is generally two or more ever, if an annuity contract is exchanged for a life insur-
service organizations whose relationship involves an own- ance or endowment contract, any gain due to interest
ership connection. Their relationship also includes the accumulated on the contract is ordinary income.
regular or significant performance of services by one or-
ganization for or in association with another. If you transfer a full or partial interest in a tax-sheltered
annuity that isn't subject to restrictions on early distribu-
Denial of interest deduction. If the loan from a quali- tions to another tax-sheltered annuity, the transfer quali-
fied plan isn't treated as a distribution because the excep- fies for nonrecognition of gain or loss.
tion applies, you can't deduct any of the interest on the
loan during any period that: If you exchange an annuity contract issued by a life in-
• The loan is secured by amounts from elective defer- surance company that is subject to a rehabilitation, con-
rals under a qualified cash or deferred arrangement servatorship, or similar state proceeding for an annuity
(section 401(k) plan) or a salary reduction agreement contract issued by another life insurance company, the
to purchase a tax-sheltered annuity, or exchange qualifies for nonrecognition of gain or loss. The
exchange is tax free even if the new contract is funded by
• You are a key employee as defined in section 416(i) of two or more payments from the old annuity contract. This
the Internal Revenue Code. also applies to an exchange of a life insurance contract for
a life insurance, endowment, annuity, or qualified
Reporting by plan. If your loan is treated as a distribu-
long-term care insurance contract.
tion (deemed distribution), you should receive a Form
1099-R showing code “L” in box 7. If your loan is treated If you transfer part of the cash surrender value of an ex-
as a qualified plan loan offset, you should receive a Form isting annuity contract for a new annuity contract issued
1099-R showing code “M” in box 7. If your loan is not a by another insurance company, the transfer qualifies for
qualified plan loan offset, no code will be reported on nonrecognition of gain or loss. The funds must be trans-
Form 1099-R for the offset. ferred directly between the insurance companies. Your in-
vestment in the original contract immediately before the
Effect on investment in the contract. If your loan is exchange is allocated between the contracts based on the
treated as a distribution, you must reduce your investment percentage of the cash surrender value allocated to each
in the contract to the extent that the distribution is tax free contract.
under the allocation rules for qualified plans, explained
earlier. Repayments of the loan increase your investment Example. You own an annuity contract issued by ABC
in the contract to the extent that the distribution is taxable Insurance. You assign 60% of the cash surrender value of
under those rules. that contract to DEF Insurance to purchase an annuity
If you receive a loan under a nonqualified plan other contract. The funds are transferred directly between the
than a 403(b) plan, including a commercial annuity con- insurance companies. You don't recognize any gain or
tract that you purchase directly from the issuer, you in- loss on the transaction. After the exchange, your invest-
crease your investment in the contract to the extent that ment in the new contract is equal to 60% of your invest-
the distribution is taxable under the general allocation rule ment in the old contract immediately before the exchange.
for nonqualified plans, explained earlier. Repayments of Your investment in the old contract is equal to 40% of your
the loan don't affect your investment in the contract. How- original investment in that contract.
ever, if the distribution is excepted from the general allo-
cation rule (for example, because it is made under a con- Tax-free transfers for certain cash distributions. If
tract entered into before August 14, 1982), you reduce you receive cash from the surrender of one contract and
your investment in the contract to the extent that the distri- invest the cash in another contract, you generally don't
bution is tax free and increase it for loan repayments to have a tax-free transfer. However, you can elect to re-
the extent that the distribution is taxable. ceive tax-free treatment for a cash distribution from an in-
surance company that is subject to a rehabilitation, con-
servatorship, insolvency, or similar state proceeding if all
Transfers of Annuity Contracts of the following conditions are met.
If you transfer without full and adequate consideration an • You withdraw all the cash to which you are entitled.
annuity contract issued after April 22, 1987, you are trea- You reinvest the proceeds within 60 days in a single
•
ted as receiving a nonperiodic distribution. The distribu- contract issued by another insurance company.
tion equals the excess of:
• You assign all rights to any future distributions to the
• The cash surrender value of the contract at the time of new issuer if the cash distribution is restricted by the
transfer, over state proceeding to an amount that is less than re-
• Your investment in the contract at that time. quired for full settlement.

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• An exchange of these contracts would otherwise qual- deductible voluntary employee contributions allowed by
ify as a tax-free transfer. the plan after 1981 and before 1987.
You must give the new issuer a statement containing If you receive a lump-sum distribution from a qualified
the following information. employee plan or qualified employee annuity and the plan
• The amount of cash distributed under the old contract. participant was born before January 2, 1936, you may be
able to elect optional methods of figuring the tax on the
• The amount of cash reinvested in the new contract. distribution. The part from active participation in the plan
• Your investment in the old contract on the date of the before 1974 may qualify as capital gain subject to a 20%
initial distribution. tax rate. The part from participation after 1973 (and any
You must also attach the following items to your timely part from participation before 1974 that you don't report as
filed income tax return for the year of the initial distribution. capital gain) is ordinary income. You may be able to use
the 10-year tax option, discussed later, to figure tax on the
• A copy of the statement you gave to the new issuer. ordinary income part.
• A statement that contains the words “ELECTION UN- Each individual, estate, or trust who receives part of a
DER REV. PROC. 92-44,” the new issuer's name, and lump-sum distribution on behalf of a plan participant who
the policy number or similar identifying information for was born before January 2, 1936, can choose whether to
the new contract. elect the optional methods for the part each received.
However, if two or more trusts receive the distribution, the
Tax-free exchange reported on Form 1099-R. If you
plan participant or the personal representative of a de-
make a tax-free exchange of an annuity contract for an-
ceased participant must make the choice.
other annuity contract issued by a different company, the
exchange will be shown on Form 1099-R with code “6” in Use Form 4972 to figure the separate tax on a
box 7. You need not report this on your tax return. lump-sum distribution using the optional methods. The tax
figured on Form 4972 is added to the regular tax figured
Date of purchase of contract received in a tax-free on your other income. This may result in a smaller tax than
exchange. If you acquire an annuity contract in a tax-free you would pay by including the taxable amount of the dis-
exchange for another annuity contract, its date of pur- tribution as ordinary income in figuring your regular tax.
chase is the date you purchased the annuity you ex-
changed. This rule applies for determining if the annuity Alternate payee under qualified domestic relations
qualifies for exemption from the tax on early distributions order. If you receive a distribution as an alternate payee
as an immediate annuity. See Tax on Early Distributions, under a qualified domestic relations order (discussed ear-
later. lier under General Information), you may be able to
choose the optional tax computations for it. You can make
Lump-Sum Distributions this choice for a distribution that would be treated as a
lump-sum distribution had it been received by your
This section on lump-sum distributions only ap- spouse or former spouse (the plan participant). However,
TIP plies if the plan participant was born before Janu- for this purpose, the balance to your credit doesn't include
ary 2, 1936. If the plan participant was born after any amount payable to the plan participant.
January 1, 1936, the taxable amount of this nonperiodic If you choose an optional tax computation for a distribu-
payment is reported as discussed earlier. tion received as an alternate payee, this choice won't af-
fect any election for distributions from your own plan.
A lump-sum distribution is the distribution or payment in
1 tax year of a plan participant's entire balance from all of More than one recipient. One or all of the recipients of
the employer's qualified plans of one kind (for example, a lump-sum distribution can use the optional tax computa-
pension, profit-sharing, or stock bonus plans). Addition- tions. See Multiple recipients of a lump-sum distribution in
ally, a lump-sum distribution is a distribution that was paid: the Instructions for Form 4972.

• Because of the plan participant's death; Reemployment. A separated employee's vested per-
• After the participant reaches age 59 / ;1 2 centage in their retirement benefit may increase if they are
rehired by the employer within 5 years following separa-
• Because the participant, if an employee, separates tion from service. This possibility doesn't prevent a distri-
from service; or bution made before reemployment from qualifying as a
• After the participant, if a self-employed individual, be- lump-sum distribution. However, if the employee elected
comes totally and permanently disabled. an optional method of figuring the tax on the distribution
A distribution from a nonqualified plan (such as a privately and their vested percentage in the previous retirement
purchased commercial annuity or a section 457 deferred benefit increases after reemployment, the employee must
compensation plan of a state or local government or recapture the tax saved. This is done by increasing the tax
tax-exempt organization) can't qualify as a lump-sum dis- for the year in which the increase in vesting first occurs.
tribution.
The participant's entire balance from a plan doesn't in-
clude certain forfeited amounts. It also doesn't include any

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Distributions that don't qualify. The following distribu- • Report the part of the distribution from participation
tions don't qualify as lump-sum distributions for the capital before 1974 as a capital gain (if you qualify) and use
gain treatment or 10-year tax option. the 10-year tax option to figure the tax on the part from
participation after 1973 (if you qualify).
• The part of a distribution not rolled over if the distribu-
tion is partially rolled over to another qualified plan or • Use the 10-year tax option to figure the tax on the total
an IRA. taxable amount (if you qualify).
• Any distribution if an earlier election to use either the • Roll over all or part of the distribution. See Rollovers,
5- or 10-year tax option had been made after 1986 for later. No tax is currently due on the part rolled over.
the same plan participant. Report any part not rolled over as ordinary income.
• U.S. Retirement Plan Bonds distributed with a lump • Report the entire taxable part of the distribution as or-
sum. dinary income on your tax return.
• Any distribution made during the first 5 tax years that The first three options are explained in the following
the participant was in the plan, unless it was made be- discussions.
cause the participant died.
Electing optional lump-sum treatment. You can
• The current actuarial value of any annuity contract in- choose to use the 10-year tax option or capital gain treat-
cluded in the lump sum. (Box 8 of Form 1099-R ment only once after 1986 for any plan participant. If you
should show this amount, which you use only to figure make this choice, you can't use either of these optional
tax on the ordinary income part of the distribution.) treatments for any future distributions for the participant.
• Any distribution to a 5% owner that is subject to penal- Complete Form 4972 and attach it to your Form 1040
ties under section 72(m)(5)(A) of the Internal Revenue or 1040-SR if you choose to use one or both of the tax op-
Code. tions. If you received more than one lump-sum distribution
for a plan participant during the year, you must add them
• A distribution from an IRA. together in your computation. If you and your spouse are
• A distribution from a tax-sheltered annuity (section filing a joint return and you both have received a
403(b) plan). lump-sum distribution, each of you should complete a
separate Form 4972.
• A distribution of the redemption proceeds of bonds
rolled over tax free to a qualified pension plan, etc., Time for choosing. You must decide to use the tax
from a qualified bond purchase plan. options before the end of the time, including extensions,
• A distribution from a qualified plan if the participant or for making a claim for credit or refund of tax. This is usu-
their surviving spouse previously received an eligible ally 3 years after the date the return was filed or 2 years
rollover distribution from the same plan (or another after the date the tax was paid, whichever is later. (Re-
plan of the employer that must be combined with that turns filed before their due date are considered filed on
plan for the lump-sum distribution rules) and the previ- their due date.)
ous distribution was rolled over tax free to another Changing your mind. You can change your mind and
qualified plan or an IRA. decide not to use the tax options within the time period
• A distribution from a qualified plan that received a roll- just discussed. If you change your mind, file Form 1040-X,
over after 2001 from an IRA (other than a conduit Amended U.S. Individual Income Tax Return, with a state-
IRA), a governmental section 457(b) plan, or a section ment saying you don't want to use the optional lump-sum
403(b) tax-sheltered annuity on behalf of the plan par- treatment. Generally, you must pay any additional tax due
ticipant. to the change with the Form 1040-X.
• A distribution from a qualified plan that received a roll- How to report. If you elect capital gain treatment (but
over after 2001 from another qualified plan on behalf not the 10-year tax option) for a lump-sum distribution, in-
of that plan participant's surviving spouse. clude the ordinary income part of the distribution on Form
1040, 1040-SR, or 1040-NR, lines 5a and 5b. Enter the
• A corrective distribution of excess deferrals, excess capital gain part of the distribution in Part II of Form 4972.
contributions, excess aggregate contributions, or ex- Include the tax from Form 4972, line 7, in the total on
cess annual additions. Form 1040, 1040-SR, or 1040-NR, line 16.
• A lump-sum credit or payment from the CSRS (or the If you elect the 10-year tax option, don't include any
FERS). part of the distribution on Form 1040, 1040-SR, or
1040-NR, lines 5a and 5b. Report the entire distribution in
How to treat the distribution. If you receive a lump-sum Part III of Form 4972 or, if you also elect capital gain treat-
distribution, you may have the following options for how to ment, report the capital gain part in Part II and the ordinary
treat the taxable part. income part in Part III. Include the tax from Form 4972,
• Report the part of the distribution from participation line 30, in the total on Form 1040, 1040-SR, or 1040-NR,
before 1974 as a capital gain (if you qualify) and the line 16.
part from participation after 1973 as ordinary income.

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Taxable and tax-free parts of the distribution. The
taxable part of a lump-sum distribution is the employer's
contributions and income earned on your account. You Capital Gain:
may recover your cost in the lump sum and any NUA in Total Taxable Months of active participation before 1974
×
employer securities tax free. Amount Total months of active participation
Cost. In general, your cost is the total of:
Ordinary Income:
• The plan participant's nondeductible contributions to
the plan, Total Taxable Months of active participation after 1973
×
Amount Total months of active participation
• The plan participant's taxable costs of any life insur-
ance contract distributed, In figuring the months of active participation before
• Any employer contributions that were taxable to the 1974, count as 12 months any part of a calendar year in
plan participant, and which the plan participant actively participated under the
plan. For active participation after 1973, count as 1 month
• Repayments of any loans that were taxable to the plan any part of a calendar month in which the participant ac-
participant. tively participated in the plan.
You must reduce this cost by amounts previously distrib- The capital gain part should be shown in box 3 of Form
uted tax free. 1099-R or other statement given to you by the payer of the
distribution.
Net unrealized appreciation (NUA). The NUA in em-
ployer securities (box 6 of Form 1099-R) received as part Reduction for federal estate tax. If any federal es-
of a lump-sum distribution is generally tax free until you tate tax (discussed under Survivors and Beneficiaries,
sell or exchange the securities. (See Distributions of em- later) was paid on the lump-sum distribution, you must de-
ployer securities under Figuring the Taxable Amount, ear- crease the capital gain by the amount of estate tax appli-
lier.) However, if you choose to include the NUA in your in- cable to it. Follow the Form 4972 instructions for Part II,
come for the year of the distribution and there is an line 6, to figure the part of the estate tax applicable to the
amount in box 3 of Form 1099-R, part of the NUA will capital gain that is used to reduce the capital gain. If you
qualify for capital gain treatment. Use the NUA Worksheet don't make the capital gain election, enter on line 18 of
in the Instructions for Form 4972 to find the part that quali- Part III the estate tax attributable to the total lump-sum dis-
fies. tribution. For information on how to figure the estate tax
attributable to the lump-sum distribution, see the Instruc-
Losses. You may be able to claim a loss on your return if tions for Form 706, United States Estate (and Genera-
you receive a lump-sum distribution that is less than the tion-Skipping Transfer) Tax Return, or contact the admin-
plan participant's cost. You must receive the distribution istrator of the decedent's estate.
entirely in cash or worthless securities. The amount you
can claim is the difference between the participant's cost
10-Year Tax Option
and the amount of the cash distribution, if any.
However, for tax years 2018 through 2025, miscellane-
The 10-year tax option is a special formula used to figure
ous itemized deductions subject to the 2%-of-adjus-
a separate tax on the ordinary income part of a lump-sum
ted-gross-income limit are suspended and therefore not
distribution. You pay the tax only once, for the year in
deductible on Schedule A (Form 1040).
which you receive the distribution, not over the next 10
A loss under a nonqualified plan, such as a com- years. You can elect this treatment only once for any plan
TIP mercial variable annuity, is deductible in the same participant, and only if the plan participant was born be-
manner as a lump-sum distribution. fore January 2, 1936.

The ordinary income part of the distribution is the
Capital Gain Treatment amount shown in box 2a of the Form 1099-R given to you
by the payer, minus the amount, if any, shown in box 3.
Capital gain treatment applies only to the taxable part of a
You can also treat the capital gain part of the distribution
lump-sum distribution resulting from participation in the
(box 3 of Form 1099-R) as ordinary income for the 10-year
plan before 1974. The amount treated as capital gain is
tax option if you don't choose capital gain treatment for
taxed at a 20% rate. You can elect this treatment only
that part.
once for any plan participant, and only if the plan partici-
pant was born before January 2, 1936.
Complete Part III of Form 4972 to choose the 10-year
Complete Part II of Form 4972 to choose the 20% capi- tax option. You must use the special Tax Rate Schedule
tal gain election. shown in the instructions for Part III to figure the tax.

Figuring the capital gain and ordinary income parts. Examples
Generally, figure the capital gain and ordinary income
parts of a lump-sum distribution by using the following for- The following examples show how to figure the separate
mulas. tax on Form 4972.

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Example 1.   Robert C. Smith, who was born in 1935,                          be $10,000. Robert elects 20% capital gain treatment for 
retired  from  Crabtree  Corporation  in  2022.  He  withdrew                this part. He enters $10,000 on Form 4972, Part II, line 6, 
the entire amount to his credit from the company's quali-                    and $2,000 ($10,000 × 20% (0.20)) on Part II, line 7.
fied pension plan. In December 2022, he received a total                            The ordinary income part of the taxable distribution is 
distribution of $175,000 (the $25,000 tax-free part of the                   $140,000  ($150,000  –  $10,000).  Robert  elects  to  figure 
distribution consisting of employee contributions plus the                   the tax on this part using the 10-year tax option. He enters 
$150,000 taxable part of the distribution consisting of em-                  $140,000  on  Form  4972,  Part  III,  line  8.  Then,  he  com-
ployer contributions and earnings on all contributions).                     pletes  the  rest  of  Form  4972  and  includes  the  tax  of 
The payer gave Robert a Form 1099-R (shown below),                           $24,270 in the total on Form 1040, 1040-SR, or 1040-NR, 
which shows the capital gain part of the taxable distribu-                   line 16. See Robert’s filled-in Form 4972, later.
tion (the part attributable to participation before 1974) to 

                                                       CORRECTED (if checked)
PAYER’S name, street address, city or town, state or province,           1  Gross distribution        OMB No. 1545-0119           Distributions From 
country, ZIP or foreign postal code, and telephone no.                                                                         Pensions, Annuities,
                                                                         $   175000.00                                                     Retirement or 
        Crabtree Corporation Employees’ Pension Plan                     2a  Taxable amount             2022                   Proﬁt-Sharing Plans, 
                                                                                                                                        IRAs, Insurance 
        1111 Main Street                                                                                                                Contracts, etc.
        Anytown, Texas 75000                                             $   150000.00                Form  1099-R
                                                                         2b  Taxable amount               Total                            Copy  B 
                                                                             not determined               distribution  X
                                                                                                                                           Report this 
PAYER’S TIN                       RECIPIENT’S TIN                        3  Capital gain (included in 4 Federal income tax              income on your 
                                                                            box 2a)                      withheld
                                                                                                                                           federal tax 
        10-0000000                  002-00-XXXX                                                                                            return. If this 
                                                                         $   10000.00                 $     30000.00                       form shows 
RECIPIENT’S name                                                         5  Employee contributions/   6  Net unrealized                 federal income 
                                                                            Designated Roth              appreciation in                tax withheld in 
                                                                            contributions or             employer’s securities             box 4, attach 
        Robert C. Smith                                                     insurance premiums
                                                                         $   25000.00                 $                                    this copy to 
Street address (including apt. no.)                                      7  Distribution     IRA/     8  Other                             your return. 
                                                                            code(s)          SEP/
                                                                                             SIMPLE
        911 Mill Way                                                         7A                                                         This information is 
                                                                                                      $                        %        being furnished to 
City or town, state or province, country, and ZIP or foreign postal code 9a  Your percentage of total 9b  Total employee contributions         the IRS.
        Anytown, Texas 75000                                                 distribution        % $
10  Amount allocable to IRR 11  1st year of desig. 12  FATCA ling       14  State tax withheld       15  State/Payer’s state no.      16  State distribution
     within 5 years                 Roth contrib.      requirement
                                                                         $                                                             $
$                                                                        $                                                             $
Account number (see instructions)                  13  Date of           17  Local tax withheld       18  Name of locality             19  Local distribution
                                                   payment               $                                                             $
                                                                         $                                                             $
Form  1099-R                        www.irs.gov/Form1099R                                               Department of the Treasury - Internal Revenue Service

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                                            Tax on Lump-Sum Distributions                                                  OMB No. 1545-0193
Form 4972                             (From Qualiﬁed Plans of Participants Born Before January 2, 1936)
Department of the Treasury                  Go to www.irs.gov/Form4972 for the latest information.                         Attachment2022
Internal Revenue Service                      Attach to Form 1040, 1040-SR, 1040-NR, or 1041.                              Sequence No. 28
Name of recipient of distribution                                                                          Identifying number
           Robert C. Smith                                                                                  002-00-XXXX
Part I        Complete this part to see if you can use Form 4972
1    Was  this  a  distribution  of  a  plan  participant’s  entire  balance  (excluding  deductible  voluntary  employee        Yes No
     contributions  and  certain  forfeited  amounts)  from  all  of  an  employer’s  qualied  plans  of  one  kind  (for 
     example, pension, prot-sharing, or stock bonus)? If “No,” don’t use this form  .    .    .   . . . . .           . .  1    
2    Did you roll over any part of the distribution? If “Yes,” don’t use this form    . . .    .   . . . . .           . .  2             
3    Was this distribution paid to you as a beneciary of a plan participant who was born before January 2, 1936?           3             
4    Were you ( )aa plan participant who received this distribution, ( ) bornb before January 2, 1936,     and (c) a 
     participant in the plan for at least 5 years before the year of the distribution?  . .    .   . . . . .           . .  4    
     If you answered “No” to both questions 3 and 4, don’t use this form.
5 a  Did you use Form 4972 after 1986 for a previous distribution from your own plan? If “Yes,”        don’t use this 
     form for a 2022 distribution from your own plan  .     .  . .   .   . .   . .    . . .    .   . . . . .           . .  5a            
b    If you are receiving this distribution as a beneciary of a plan participant who died, did you use Form 4972 
     for a previous distribution received as a beneciary of that participant after 1986? If “Yes,”    don’t use this
     form for this distribution  .      . . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .           . .  5b
Part II       Complete this part to choose the 20% capital gain elections (see instructions)
6    Capital gain part from Form 1099-R, box 3  .       . . .  . .   .   . .   . .    . . .    .   . . . . .             6  10,000
7    Multiply line 6 by 20% (0.20)        . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             7  2,000
     If you also choose to use Part III, go to line 8. Otherwise, include the amount from line 7 in the total 
     on Form 1040, 1040-SR, or 1040-NR, line 16, or Form 1041, Schedule G, line 1b. Be sure to check 
     box 2 on Form 1040, 1040-SR, or 1040-NR, line 16.
Part III      Complete this part to choose the 10-year tax option (see instructions)
8    If  you  completed  Part  II,  enter  the  amount  from  Form  1099-R,  box  2a,  minus  box  3.  If  you  didn’t 
     complete  Part  II,  enter  the  amount  from  box  2a.  Multiple  recipients  (and  recipients  who  elect  to 
     include net unrealized appreciation (NUA) in taxable income), see instructions .     .    .   . . . . .             8  140,000
9    Death benet exclusion for a beneciary of a plan participant who died before August 21, 1996  .      .             9 
10   Total taxable amount. Subtract line 9 from line 8  .   .  . .   .   . .   . .    . . .    .   . . . . .             10 140,000
11   Current actuarial value of annuity from Form 1099-R, box 8. If none, enter -0-  .    .    .   . . . . .             11      -0-
12   Adjusted total taxable amount. Add lines 10 and 11. If this amount is $70,000 or more,        skip lines 13 
     through 16, enter this amount on line 17, and go to line 18 .   .   . .   . .    . . .    .   . . . . .             12 140,000
13   Multiply line 12 by 50% (0.50), but don’t enter more than $10,000  .      . .    .   13 
14   Subtract $20,000 from line 12. If line 12 is $20,000 or 
     less, enter -0-  .           . . . . . .  .  . .   . . .    14 
15   Multiply line 14 by 20% (0.20)  .      .  .  . .   . . .  . .   .   . .   . .    .   15 
16   Minimum distribution allowance. Subtract line 15 from line 13       . .   . .    . . .    .   . . . . .             16 
17   Subtract line 16 from line 12 .      . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             17 140,000
18   Federal estate tax attributable to lump-sum distribution    .   .   . .   . .    . . .    .   . . . . .             18 
19   Subtract line 18 from line 17. If line 11 is zero, skip lines 20 through 22 and go to line 23   . . . .             19 140,000
20   Divide line 11 by line 12 and enter the result as a decimal (rounded to at least 
     three places) .       .      . . . . . .  .  . .   . . .  . .   .   . .   . .    .   20         .
21   Multiply line 16 by the decimal on line 20     .   . . .  . .   .   . .   . .    .   21 
22   Subtract line 21 from line 11        . .  .  . .   . . .  . .   .   . .   . .    .   22 
23   Multiply line 19 by 10% (0.10)  .      .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             23 14,000
24   Tax on amount on line 23. Use the Tax Rate Schedule in the instructions  .       . . .    .   . . . . .             24 2,227
25   Multiply line 24 by 10.0. If line 11 is zero,  skip lines 26 through 28, enter this amount on line 29, and 
     go to line 30  .      .      . . . . . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             25 22,270
26   Multiply line 22 by 10% (0.10)  .      .  .  . .   . . .  . .   .   . .   . .    .   26 
27   Tax on amount on line 26. Use the Tax Rate Schedule in the instructions  .       .   27 
28   Multiply line 27 by 10.0  .        . . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             28 
29   Subtract line 28 from line 25. Multiple recipients, see instructions  .   . .    . . .    .   . . . . .             29 22,270
30   Tax on lump-sum distribution.          Add lines 7 and 29. Also, include this amount in the total on Form
     1040, 1040-SR, or 1040-NR, line 16 (check box 2), or Form 1041, Schedule G, line 1b           . . . . .             30 24,270
For Paperwork Reduction Act Notice, see instructions.                          Cat. No. 13187U                              Form 4972 (2022)

Publication 575 (2022)                                                                                                          Page 25

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Example 2.   Mary Brown, who was born in 1935, sold                          as  part  of  the  distribution  from  the  plan.  Box  8  of  Form 
her business in 2022. She withdrew her entire interest in                    1099-R shows that the current actuarial value of the annu-
the qualified profit-sharing plan she had set up as the sole                 ity was $10,000. She enters these figures on Form 4972
proprietor.                                                                  (shown later).
The cash part of the distribution, $160,000, is all ordi-                           After  completing  Form  4972,  she  includes  the  tax  of 
nary  income  and  is  shown  on  her Form  1099-R  below.                   $28,070 in the total on Form 1040, 1040-SR, or 1040-NR, 
She  chooses  to  figure  the  tax  on  this  amount  using  the             line 16.
10-year tax option. Mary also received an annuity contract 

                                                       CORRECTED (if checked)
PAYER’S name, street address, city or town, state or province,           1  Gross distribution        OMB No. 1545-0119           Distributions From 
country, ZIP or foreign postal code, and telephone no.                                                                         Pensions, Annuities,
                                                                         $   160000.00                                                     Retirement or 
     Brown’s Real Estate                                                 2a  Taxable amount             2022                   Proﬁt-Sharing Plans, 
     Proﬁt-Sharing Plan                                                                                                                 IRAs, Insurance 
                                                                                                                                        Contracts, etc.
     2101 Chelsea Court                                                  $   160000.00                 Form  1099-R
     Anytown, Nevada 89300                                               2b  Taxable amount               Total                            Copy  B 
                                                                             not determined               distribution  X
                                                                                                                                           Report this 
PAYER’S TIN                       RECIPIENT’S TIN                        3  Capital gain (included in 4 Federal income tax              income on your 
                                                                            box 2a)                      withheld
                                                                                                                                           federal tax 
  10-0000000                        005-00-XXXX                                                                                            return. If this 
                                                                         $                            $ 32000.00                           form shows 
RECIPIENT’S name                                                         5  Employee contributions/   6  Net unrealized                 federal income 
                                                                            Designated Roth              appreciation in                tax withheld in 
  Mary Brown                                                                contributions or             employer’s securities             box 4, attach 
                                                                            insurance premiums
                                                                         $   25000.00                 $                                    this copy to 
Street address (including apt. no.)                                      7  Distribution     IRA/     8  Other                             your return. 
                                                                            code(s)          SEP/
                                                                                             SIMPLE
  12 Mill Avenue                                                                                                                        This information is 
                                                                            7A                        $10000.00                %        being furnished to 
City or town, state or province, country, and ZIP or foreign postal code 9a  Your percentage of total 9b  Total employee contributions         the IRS.
  Anytown, Nevada 89300                                                      distribution        % $
10  Amount allocable to IRR 11  1st year of desig. 12  FATCA ling       14  State tax withheld       15  State/Payer’s state no.      16  State distribution
     within 5 years                 Roth contrib.      requirement
                                                                         $                                                             $
$                                                                        $                                                             $
Account number (see instructions)                  13  Date of           17  Local tax withheld       18  Name of locality             19  Local distribution
                                                   payment               $                                                             $
                                                                         $                                                             $
Form  1099-R                          www.irs.gov/Form1099R                                             Department of the Treasury - Internal Revenue Service

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                                            Tax on Lump-Sum Distributions                                                  OMB No. 1545-0193
Form 4972                             (From Qualiﬁed Plans of Participants Born Before January 2, 1936)
Department of the Treasury                  Go to www.irs.gov/Form4972 for the latest information.                         Attachment2022
Internal Revenue Service                      Attach to Form 1040, 1040-SR, 1040-NR, or 1041.                              Sequence No. 28
Name of recipient of distribution                                                                          Identifying number
Mary Brown                                                                                                  005-00-XXXX
Part I        Complete this part to see if you can use Form 4972
1    Was  this  a  distribution  of  a  plan  participant’s  entire  balance  (excluding  deductible  voluntary  employee        Yes No
     contributions  and  certain  forfeited  amounts)  from  all  of  an  employer’s  qualied  plans  of  one  kind  (for 
     example, pension, prot-sharing, or stock bonus)? If “No,” don’t use this form  .    .    .   . . . . .           . .  1          
2    Did you roll over any part of the distribution? If “Yes,” don’t use this form    . . .    .   . . . . .           . .  2             
3    Was this distribution paid to you as a beneciary of a plan participant who was born before January 2, 1936?           3             
4    Were you ( )aa plan participant who received this distribution, ( ) bornb before January 2, 1936,     and (c) a 
     participant in the plan for at least 5 years before the year of the distribution?  . .    .   . . . . .           . .  4          
     If you answered “No” to both questions 3 and 4, don’t use this form.
5 a  Did you use Form 4972 after 1986 for a previous distribution from your own plan? If “Yes,”        don’t use this 
     form for a 2022 distribution from your own plan  .     .  . .   .   . .   . .    . . .    .   . . . . .           . .  5a            
b    If you are receiving this distribution as a beneciary of a plan participant who died, did you use Form 4972 
     for a previous distribution received as a beneciary of that participant after 1986? If “Yes,”    don’t use this
     form for this distribution  .      . . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .           . .  5b
Part II       Complete this part to choose the 20% capital gain elections (see instructions)
6    Capital gain part from Form 1099-R, box 3  .       . . .  . .   .   . .   . .    . . .    .   . . . . .             6 
7    Multiply line 6 by 20% (0.20)        . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             7 
     If you also choose to use Part III, go to line 8. Otherwise, include the amount from line 7 in the total 
     on Form 1040, 1040-SR, or 1040-NR, line 16, or Form 1041, Schedule G, line 1b. Be sure to check 
     box 2 on Form 1040, 1040-SR, or 1040-NR, line 16.
Part III      Complete this part to choose the 10-year tax option (see instructions)
8    If  you  completed  Part  II,  enter  the  amount  from  Form  1099-R,  box  2a,  minus  box  3.  If  you  didn’t 
     complete  Part  II,  enter  the  amount  from  box  2a.  Multiple  recipients  (and  recipients  who  elect  to 
     include net unrealized appreciation (NUA) in taxable income), see instructions .     .    .   . . . . .             8    160,000
9    Death benet exclusion for a beneciary of a plan participant who died before August 21, 1996  .      .             9 
10   Total taxable amount. Subtract line 9 from line 8  .   .  . .   .   . .   . .    . . .    .   . . . . .             10   160,000
11   Current actuarial value of annuity from Form 1099-R, box 8. If none, enter -0-  .    .    .   . . . . .             11      10,000
12   Adjusted total taxable amount. Add lines 10 and 11. If this amount is $70,000 or more, skip lines 13 
     through 16, enter this amount on line 17, and go to line 18 .   .   . .   . .    . . .    .   . . . . .             12   170,000
13   Multiply line 12 by 50% (0.50), but don’t enter more than $10,000  .      . .    .   13 
14   Subtract $20,000 from line 12. If line 12 is $20,000 or 
     less, enter -0-  .           . . . . . .  .  . .   . . .    14 
15   Multiply line 14 by 20% (0.20)  .      .  .  . .   . . .  . .   .   . .   . .    .   15 
16   Minimum distribution allowance. Subtract line 15 from line 13       . .   . .    . . .    .   . . . . .             16 
17   Subtract line 16 from line 12 .      . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             17   170,000
18   Federal estate tax attributable to lump-sum distribution    .   .   . .   . .    . . .    .   . . . . .             18 
19   Subtract line 18 from line 17. If line 11 is zero, skip lines 20 through 22 and go to line 23   . . . .             19   170,000
20   Divide line 11 by line 12 and enter the result as a decimal (rounded to at least 
     three places) .       .      . . . . . .  .  . .   . . .  . .   .   . .   . .    .   20         . 0588
21   Multiply line 16 by the decimal on line 20     .   . . .  . .   .   . .   . .    .   21 
22   Subtract line 21 from line 11        . .  .  . .   . . .  . .   .   . .   . .    .   22         10,000
23   Multiply line 19 by 10% (0.10)  .      .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             23      17,000
24   Tax on amount on line 23. Use the Tax Rate Schedule in the instructions  .       . . .    .   . . . . .             24            2,917
25   Multiply line 24 by 10.0. If line 11 is zero,  skip lines 26 through 28, enter this amount on line 29, and 
     go to line 30  .      .      . . . . . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             25      29,170
26   Multiply line 22 by 10% (0.10)  .      .  .  . .   . . .  . .   .   . .   . .    .   26           1,000
27   Tax on amount on line 26. Use the Tax Rate Schedule in the instructions  .       .   27           110
28   Multiply line 27 by 10.0  .        . . .  .  . .   . . .  . .   .   . .   . .    . . .    .   . . . . .             28            1,100
29   Subtract line 28 from line 25. Multiple recipients, see instructions  .   . .    . . .    .   . . . . .             29      28,070
30   Tax on lump-sum distribution.          Add lines 7 and 29. Also, include this amount in the total on Form
     1040, 1040-SR, or 1040-NR, line 16 (check box 2), or Form 1041, Schedule G, line 1b           . . . . .             30      28,070
For Paperwork Reduction Act Notice, see instructions.                          Cat. No. 13187U                              Form 4972 (2022)

Publication 575 (2022)                                                                                                             Page 27

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b. The joint lives or life expectancies of you and your
beneficiary, or
Rollovers
c. A period of 10 years or more.
If you withdraw cash or other assets from a qualified re-
2. An RMD (discussed later under Tax on Excess Accu-
tirement plan in an eligible rollover distribution, you can
mulation).
generally defer tax on the distribution by rolling it over to
another qualified retirement plan, a traditional IRA or, after 3. Hardship distributions.
2 years of participation in a SIMPLE IRA sponsored by
4. Corrective distributions of excess contributions or ex-
your employer, a SIMPLE IRA under that plan. You don't
cess deferrals, and any income allocable to these dis-
include the amount rolled over in your income until you re-
tributions, or of excess annual additions and any allo-
ceive it in a distribution from the recipient plan or IRA with-
cable gains (see Corrective distributions of excess
out rolling over that distribution. (For information about
plan contributions at the beginning of Taxation of
rollovers from traditional IRAs, see chapter 1 of Pub.
Nonperiodic Payments, earlier).
590-A.)
5. A loan treated as a distribution because it doesn’t sat-
If you roll over the distribution to a traditional IRA, you isfy certain requirements either when made or later
can't deduct the amount rolled over as an IRA contribu- (such as upon default), unless the participant's ac-
tion. When you later withdraw it from the IRA, you can't crued benefits are reduced (offset) to repay the loan.
use the optional methods discussed earlier under See Loans Treated as Distributions, earlier, and the
Lump-Sum Distributions to figure the tax. discussion of plan loan offsets, including qualified
Self-employed individuals are generally treated as em- plan loan offsets, under the heading Time for making
ployees for the rules on the tax treatment of distributions, rollover, later.
including the rules for rollovers. 6. Dividends paid on employer securities.
See Designated Roth accounts, later, for information 7. The cost of life insurance coverage.
on rollovers (including in-plan Roth rollovers) related to
those accounts. Also, see Rollovers to Roth IRAs, later, In addition, a distribution to the plan participant's bene-
for information on rollovers from a qualified retirement ficiary isn’t generally treated as an eligible rollover distri-
plan to a Roth IRA. bution. However, see Qualified domestic relations order
(QDRO) Rollover by surviving spouse, , and Rollovers by
Rollovers to SIMPLE retirement accounts. You can nonspouse beneficiary, later.
also roll over amounts from a qualified retirement plan (as
described next) or an IRA into a SIMPLE retirement ac- Rollover of nontaxable amounts. You may be able to
count as follows. roll over the nontaxable part of a distribution (such as your
after-tax contributions) made to another qualified retire-
1. During the first 2 years of participation in a SIMPLE ment plan that is a qualified employee plan or a 403(b)
retirement account, you may roll over amounts from plan, or to a traditional or Roth IRA. The transfer must be
one SIMPLE retirement account into another SIMPLE made either through a direct rollover to a qualified plan or
retirement account. 403(b) plan that separately accounts for the taxable and
2. After 2 years of participation in a SIMPLE retirement nontaxable parts of the rollover or through a rollover to a
account, you may roll over amounts from a SIMPLE traditional or Roth IRA.
retirement account, a qualified retirement plan, or an If you roll over only part of a distribution that includes
IRA into a SIMPLE retirement account. both taxable and nontaxable amounts, the amount you roll
over is treated as coming first from the taxable part of the
Qualified retirement plan. For this purpose, the follow- distribution.
ing plans are qualified retirement plans. Any after-tax contributions that you roll over into your
traditional IRA become part of your basis (cost) in your
• A qualified employee plan.
IRAs. To recover your basis when you take distributions
• A qualified employee annuity. from your IRA, you must complete Form 8606, Nondeduc-
• A tax-sheltered annuity plan (403(b) plan). tible IRAs, for the year of the distribution. For more infor-
mation, see the Instructions for Form 8606.
• An eligible state or local governmental section 457 de-
ferred compensation plan. Withholding requirements. If an eligible rollover distri-
bution is paid to you, the payer must withhold 20% of it.
Eligible rollover distribution. An eligible rollover distri- This applies even if you plan to roll over the distribution to
bution is any distribution of all or any part of the balance to another qualified retirement plan or to an IRA. However,
your credit in a qualified retirement plan except the follow- you can avoid withholding by choosing the direct rollover
ing. option, discussed later. Also, see Choosing the right op-
1. Any of a series of substantially equal distributions tion at the end of this discussion.
paid at least once a year over: Exceptions. An eligible rollover distribution isn't sub-
a. Your lifetime or life expectancy, ject to withholding to the extent it consists of NUA from

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employer securities that can be excluded from your gross Rolling over more than amount received. If
income. (For a discussion of the tax treatment of a distri- ! you decide to roll over an amount equal to the dis-
bution of employer securities, see Figuring the Taxable CAUTION tribution before withholding, your contribution to
Amount under Taxation of Nonperiodic Payments, ear- the new plan or IRA must include other money (for exam-
lier.) ple, from savings or amounts borrowed) to replace the
In addition, withholding from an eligible rollover distri- amount withheld.
bution paid to you isn't required if:
• The distribution and all previous eligible rollover distri- Example. You receive an eligible rollover distribution
butions you received during the tax year from the of $10,000 from your employer's qualified employee plan.
same plan (or, at the payer's option, from all your em- The payer withholds $2,000, so you actually receive
ployer's plans) total less than $200; or $8,000. If you want to roll over the entire $10,000 to post-
pone including that amount in your income, you will have
• The distribution consists solely of employer securities, to get $2,000 from some other source to add to the $8,000
plus cash of $200 or less instead of fractional shares. you actually received.
If you roll over only $8,000, you must include the
Direct rollover option. You can choose to have any part
$2,000 not rolled over in your income for the distribution
or all of an eligible rollover distribution paid directly to an-
year. Also, you may be subject to the 10% additional tax
other qualified retirement plan that accepts rollover distri-
on the $2,000 if it was distributed to you before you
butions or to a traditional or Roth IRA. 1 2
reached age 59 / .
There is an automatic rollover requirement for manda-
tory distributions. A mandatory distribution is a distribution Time for making rollover. You must generally complete
made without your consent and before you reach age 62 the rollover of an eligible rollover distribution paid to you
or normal retirement age, whichever is later. The auto- by the 60th day following the day on which you receive the
matic rollover requirement applies if the distribution is distribution from your employer's plan.
more than $1,000 and is an eligible rollover distribution. The IRS may waive the 60-day requirement where the
You can choose to have the distribution paid directly to failure to do so would be against equity or good con-
you or rolled over directly to your traditional or Roth IRA or science, such as in the event of a casualty, disaster, or
another qualified retirement plan. If you don't make this other event beyond your reasonable control.
choice, the plan administrator will automatically roll over
the distribution into an IRA of a designated trustee or is- Example. In the previous example, you received the
suer. distribution on June 30. To postpone including it in your in-
No tax withheld. If you choose the direct rollover op- come, you must complete the rollover by August 29, the
tion, or have an automatic rollover, no tax will be withheld 60th day following June 30.
from any part of the distribution that is directly paid to the Plan loan offset. A plan loan offset is the amount your
trustee of the other plan. If any part of the eligible rollover employer plan account balance is reduced, or offset, to re-
distribution is paid to you, the payer must generally with- pay a loan from the plan. How long you have to complete
hold 20% of it for income tax. the rollover of a plan loan offset depends on what kind of
plan loan offset you have. For tax years beginning after
Payment-to-you option. If an eligible rollover distribu- 2017, if you have a qualified plan loan offset, you will have
tion is paid to you, 20% will generally be withheld for in- until the due date (including extensions) for your tax return
come tax. However, the full amount is treated as distrib- for the tax year in which the offset occurs to complete your
uted to you even though you actually receive only 80%. rollover.
You must generally include in income any part (including A qualified plan loan offset occurs when a plan loan
the part withheld) that you don't roll over within 60 days to in good standing is offset because your employer plan ter-
another qualified retirement plan or to a traditional or Roth minates, or because you have a severance from employ-
IRA. ment. If your plan loan offset occurs for any other reason,
If you are under age 59 / when a distribution is paid to 1 2 then you have 60 days from the date the offset occurs to
you, you may have to pay a 10% tax (in addition to the complete your rollover.
regular income tax) on the taxable part (including any tax
withheld) that you don't roll over. See Tax on Early Distri- Ways to get a waiver of the 60-day rollover require-
butions, later. ment. There are three ways to obtain a waiver of the
Partial rollovers. If you receive a lump-sum distribu- 60-day requirement.
tion, it may qualify for special tax treatment. See • You qualify for an automatic waiver.
Lump-Sum Distributions, earlier. However, if you roll over
• You self-certify that you met the requirements of a
any part of the distribution, the part you keep doesn't qual-
waiver.
ify for special tax treatment.
• You request and receive a private letter ruling granting
a waiver.
For more information about requesting a waiver of the
60-day rollover requirement, rollovers permitted between

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the various types of retirement plans (including IRAs), and Example 2. The facts are the same as in Example 1,
other topics regarding rollovers, see Rollovers in Pub. except that Paul sold the stock for $40,000 and contrib-
590-A. uted $40,000 to the IRA. Paul doesn't include the $50,000
eligible rollover distribution in his income and doesn't de-
Frozen deposits. If an amount distributed to you be-
duct the $10,000 loss from the sale of the stock. The
comes a frozen deposit in a financial institution during the
$40,000 rolled over will be ordinary income when he with-
60-day period after you receive it, the rollover period is ex-
draws it from his IRA.
tended. An amount is a frozen deposit if you can't with-
draw it because of either: Example 3. The facts are the same as in Example 1,
• The bankruptcy or insolvency of the financial institu- except that Paul rolled over only $45,000 of the $60,000
tion, or proceeds from the sale of the stock. The $15,000 pro-
ceeds he didn't roll over include part of the gain from the
• A restriction on withdrawals by the state in which the stock sale. Paul reports $2,500 ($10,000 ÷ $60,000 ×
institution is located because of the bankruptcy or in- $15,000) as capital gain and $12,500 ($50,000 ÷ $60,000
solvency (or threat of it) of one or more financial insti- × $15,000) as ordinary income.
tutions in the state.
The 60-day rollover period is extended by the period for Example 4. The facts are the same as in Example 2,
which the amount is a frozen deposit and doesn't end ear- except that Paul rolled over only $25,000 of the $40,000
lier than 10 days after the amount is no longer a frozen de- proceeds from the sale of the stock. The $15,000 pro-
posit. ceeds he didn’t roll over include part of the loss from the
stock sale. Paul reports $3,750 ($10,000 ÷ $40,000 ×
Retirement bonds. If you redeem retirement bonds pur- $15,000) capital loss and $18,750 ($50,000 ÷ $40,000 ×
chased under a qualified bond purchase plan, you can roll $15,000) ordinary income.
over the proceeds that exceed your basis tax free into an
IRA or qualified employer plan. Subsequent distributions Property and cash distributed. If both cash and prop-
of those proceeds, however, don't qualify for the 10-year erty were distributed and you didn't roll over the entire dis-
tax option or capital gain treatment. tribution, you may designate what part of the rollover is al-
locable to the cash distribution and what part is allocable
Annuity contracts. If an annuity contract was distributed to the proceeds from the sale of the distributed property. If
to you by a qualified retirement plan, you can roll over an the distribution included an amount that isn’t taxable
amount paid under the contract that is otherwise an eligi- (other than the NUA in employer securities) as well as an
ble rollover distribution. For example, you can roll over a eligible rollover distribution, you may also designate what
single-sum payment you receive upon surrender of the part of the nontaxable amount is allocable to the cash dis-
contract to the extent it is taxable and isn't an RMD. tribution and what part is allocable to the property. Your
designation must be made by the due date for filing your
Rollovers of property. To roll over an eligible rollover tax return, including extensions. You can't change your
distribution of property, you must either roll over the actual designation after that date. If you don't make a designa-
property distributed or sell it and roll over the proceeds. tion on time, the rollover amount or the nontaxable amount
You can't keep the distributed property and roll over cash must be allocated on a ratable basis.
or other property.
If you sell the distributed property and roll over all the Qualified domestic relations order (QDRO). You may
proceeds, no gain or loss is recognized on the sale. The be able to roll over tax free all or part of a distribution from
sale proceeds (including any portion representing an in- a qualified retirement plan that you receive under a
crease in value) are treated as part of the distribution and QDRO. (See Qualified domestic relations order (QDRO)
aren't included in your gross income. under General Information, earlier.) If you receive the dis-
If you roll over only part of the proceeds, you are taxed tribution as an employee's spouse or former spouse (not
on the part you keep. You must allocate the proceeds you as a nonspouse beneficiary), the rollover rules apply to
keep between the part representing ordinary income from you as if you were the employee.
the distribution (its value upon distribution) and the part
representing gain or loss from the sale (its change in value Rollover by surviving spouse. You may be able to roll
from its distribution to its sale). over tax free all or part of a distribution from a qualified re-
tirement plan you receive as the surviving spouse of a de-
Example 1. On September 4, 2022, Paul received an ceased employee. The rollover rules apply to you as if you
eligible rollover distribution from his employer's noncontri- were the employee. You can roll over the distribution into
butory qualified employee plan of $50,000 in nonemployer a qualified retirement plan or a traditional or Roth IRA. For
stock. On September 24, 2022, he sold the stock for a rollover to a Roth IRA, see Rollovers to Roth IRAs, later.
$60,000. On October 2, 2022, he contributed $60,000 A distribution paid to a beneficiary other than the em-
cash to a traditional IRA. Paul doesn't include either the ployee's surviving spouse is generally not an eligible roll-
$50,000 eligible rollover distribution or the $10,000 gain over distribution. However, see Rollovers by nonspouse
from the sale of the stock in his income. The entire beneficiary next.
$60,000 rolled over will be ordinary income when he with-
draws it from his IRA.

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Rollovers by nonspouse beneficiary. If you are a des- Designated Roth accounts. You can roll over an eligi-
ignated beneficiary (other than a surviving spouse) of a ble rollover distribution from a designated Roth account
deceased employee, you may be able to roll over tax free into another designated Roth account or a Roth IRA. If
all or a portion of a distribution you receive from an eligible you want to roll over the part of the distribution that isn't in-
retirement plan of the employee. The distribution must be cluded in income, you must make a direct rollover of the
a direct trustee-to-trustee transfer to your traditional or entire distribution (see Direct rollover option, earlier) or
Roth IRA that was set up to receive the distribution. The you can roll over the entire amount (or any portion) to a
transfer will be treated as an eligible rollover distribution Roth IRA. Also, if you are a plan participant in a 401(k),
and the receiving plan will be treated as an inherited IRA. 403(b), or 457(b) plan, your plan may permit you to roll
For information on inherited IRAs, see What if You Inherit over amounts in those plans to a designated Roth account
an IRA? in chapter 1 of Pub. 590-B. within the same plan (in-plan Roth rollover). The rollover
of any untaxed amounts is included in income. See
How to report. Enter the total distribution (before income In-plan Roth rollovers, later.
tax or other deductions were withheld) on Form 1040, A qualified distribution from a designated Roth account
1040-SR, or 1040-NR, line 5a. This amount should be isn't includible in income. (A qualified distribution is de-
shown in box 1 of Form 1099-R. From this amount, sub- fined earlier in the discussion of designated Roth ac-
tract any contributions (usually shown in box 5 of Form counts under Taxation of Periodic Payments ). Generally,
1099-R) that were taxable to you when made. From that you can't have a qualified distribution within the 5-tax-year
result, subtract the amount that was rolled over either di- period beginning with the first tax year for which the partic-
rectly or within 60 days of receiving the distribution. Enter ipant made a designated Roth contribution to the plan. If a
the remaining amount, even if zero, on Form 1040, direct rollover is made from a designated Roth account
1040-SR, or 1040-NR, line 5b. Also, enter “Rollover” next under another plan or an in-plan Roth rollover is made, the
to the line. 5-tax-year period of participation begins on the first day of
your tax year for which you first had designated Roth con-
Written explanation to recipients. The administrator of
tributions made to the account, either making the distribu-
a qualified retirement plan must, within a reasonable pe-
tion or receiving the distribution, whichever was earlier.
riod of time before making an eligible rollover distribution,
If you roll over only part of an eligible rollover distribu-
provide you with a written explanation. It must tell you
tion that isn't a qualified distribution and not paid as a di-
about all of the following.
rect rollover contribution, the part rolled over is considered
• Your right to have the distribution paid tax free directly to be first from the income portion of the distribution.
to another qualified retirement plan or to a traditional
or Roth IRA. Example. You receive an eligible rollover distribution
that isn't a qualified distribution from your designated Roth
• The requirement to withhold tax from the distribution if account. The distribution consists of $11,000 (investment)
it isn't directly rolled over. and $3,000 (income earned). Within 60 days of receipt,
• The nontaxability of any part of the distribution that you roll over $7,000 into a Roth IRA. The $7,000 consists
you roll over within 60 days after you receive the distri- of $3,000 of income and $4,000 of investment. Because
bution. you rolled over the part of the distribution that could be in-
cluded in gross income (income earned), none of the dis-
• Other qualified retirement plan rules that apply, includ-
tribution is included in gross income.
ing those for lump-sum distributions, alternate payees,
and cash or deferred arrangements. In-plan Roth rollovers. If you are a participant in a
• How the distribution rules of the plan to which you roll 401(k), 403(b), or 457(b) plan, your plan may permit you
over the distribution may differ from the rules that ap- to roll over any vested amounts from those plans to a des-
ply to the plan making the distribution in their restric- ignated Roth account within the same plan. The in-plan
tions and tax consequences. Roth rollover must be an eligible rollover distribution (de-
fined earlier under Eligible rollover distribution). Any un-
Reasonable period of time. The plan administrator taxed amounts included in the in-plan Roth rollover must
must provide you with a written explanation no earlier than be included in income in the year you receive the distribu-
90 days and no later than 30 days before the distribution tion.
is made. However, you can choose to have a distribution You can make the in-plan Roth rollover by direct trans-
made less than 30 days after the explanation is provided fer of the amount from the non-Roth account to your des-
as long as the following two requirements are met. ignated Roth account within the same plan. The 20%
• You must have the opportunity to consider whether or mandatory withholding doesn't apply to in-plan Roth roll-
not you want to make a direct rollover for at least 30 overs made by direct rollover. You can also effect the
days after the explanation is provided. in-plan Roth rollover by receiving an eligible rollover distri-
bution from your 401(k), 403(b), or 457(b) plan and within
• The information you receive must clearly state that
60 days depositing it into a designated Roth account in
you have the right to have 30 days to make a decision.
the same plan.
Contact the plan administrator if you have any questions Your plan must provide a written explanation of the
regarding this information. consequences of making an in-plan Roth rollover. In-plan
Roth rollovers can't be undone. Unlike rollovers to Roth

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IRAs, you can't later recharacterize an in-plan Roth roll- Choosing the right option. Table 1 may help you de-
over. cide which distribution option to choose. Carefully com-
pare the effects of each option.
If you received employer securities as a part of
TIP your in-plan Roth rollover distribution, the rollover
is treated as a distribution for the purpose of NUA. Table 1. Comparison of Payment to You
See Distributions of employer securities, earlier. Versus Direct Rollover

Mandatory 20% withholding. A payor must normally Result of a payment to Result of a direct
withhold 20% when a rollover distribution is paid to you. Affected item you rollover
However, some part of your distribution may not be sub- The payer must withhold
Withholding There is no withholding.
ject to the mandatory 20% withholding. Otherwise nondis- 20% of the taxable part.
tributable amounts aren't subject to the mandatory 20% If you are under age
withholding. An example of otherwise nondistributable 59 / , a 10% additional 1 2
amounts is employer matching contributions in a 401(k) tax may apply to the There is no 10%
plan. See Payment-to-you option, earlier. Additional tax taxable part (including additional tax. See Tax
an amount equal to the on Early Distributions.
You can't roll over amounts from your traditional tax withheld) that isn't
! TSP to your Roth TSP. See Pub. 721 for more de- rolled over.
CAUTION tails.
Any taxable part Any taxable part isn't
(including the taxable income to you until later
How to report. Enter the total amount of the distribu- part of any amount distributed to you from
When to report
withheld) not rolled over the new plan or IRA.
tion before income tax or deductions were withheld on as income
Form 1040, 1040-SR, or 1040-NR, line 5a. This amount is income to you in the However, see Rollovers
should be shown in box 1 of Form 1099-R. From this year paid. to Roth IRAs for an
amount, subtract any contributions (usually shown in exception.
box 5 of Form 1099-R) that were taxable to you when
made. Enter the remaining amount, even if zero, on Form Qualified settlement income. If you are a qualified tax-
1040, 1040-SR, or 1040-NR, line 5b. payer and you received qualified settlement income in
If you must include any amount in your gross in- connection with the Exxon Valdez litigation, you can con-
tribute all or part of it to an eligible retirement plan. This in-
! come, you may have to increase your withholding cludes a qualified retirement plan. The amount contrib-
CAUTION or make estimated tax payments. See Pub. 505.
uted can’t exceed $100,000 (reduced by the amount of
qualified settlement income contributed to an eligible re-
Rollovers to Roth IRAs. You can roll over distributions
tirement plan in prior tax years) or the amount of qualified
directly from a qualified retirement plan (other than a des-
settlement income received during the tax year. Contribu-
ignated Roth account) to a Roth IRA. You must include in
tions for the year can be made until the due date for filing
your gross income distributions from a qualified retirement
your tax return, not including extensions.
plan (other than a designated Roth account) that you
Qualified settlement income that you contribute to a
would have had to include in income if you hadn't rolled
qualified retirement plan will be treated as having been
them over into a Roth IRA. You don't include in gross in-
rolled over in a direct trustee-to-trustee transfer within 60
come any part of a distribution from a qualified retirement
days of the distribution. The amount contributed isn’t in-
plan that is a return of contributions to the plan that were
cluded in your taxable income and it isn’t considered to be
taxable to you when paid. In addition, the 10% tax on early
investment in the contract.
distributions doesn't apply.
You are a qualified taxpayer if you are:
Any amount rolled over into a Roth IRA is subject to the
same rules for converting a traditional IRA into a Roth IRA. • A plaintiff in the civil action In re Exxon Valdez, No.
For more information, see Converting From Any Tradi- 89-095-CV (HRH) (Consolidated) (D. Alaska), or
tional IRA Into a Roth IRA in chapter 1 of Pub. 590-A. The beneficiary of the estate of a plaintiff who ac-
•
How to report. Enter the total amount of the distribu- quired the right to receive qualified settlement income
tion before income tax or deductions were withheld on from that plaintiff and who is the spouse or immediate
Form 1040, 1040-SR, or 1040-NR, line 5a. This amount relative of that plaintiff.
should be shown in box 1 of Form 1099-R. From this Qualified settlement income is any interest or punitive
amount, subtract any contributions (usually shown in damage awards which are:
box 5 of Form 1099-R) that were taxable to you when
made. Enter the remaining amount, even if zero, on Form • Otherwise includible in income, and
1040, 1040-SR, or 1040-NR, line 5b. • Received in connection with the Exxon Valdez civil ac-
If you must include any amount in your gross in- tion described (whether pre- or post-judgment and
whether related to a settlement or a judgment).
! come, you may have to increase your withholding
CAUTION or make estimated tax payments. See Pub. 505. Qualified settlement income can be received as periodic
payments or as a lump sum. See Pub. 525 for information
on how to report Exxon Valdez settlement income.

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Special  rule  for  Roth  IRAs  and  designated  Roth              • A tax-sheltered annuity plan (403(b) plan), or
accounts. Qualified  settlement  income  that  is  contrib-
                                                                   • An eligible state or local governmental section 457 de-
uted to a Roth IRA or a designated Roth account will be:
                                                                     ferred compensation plan (to the extent that any distri-
• Included in your taxable income for the year the quali-            bution is attributable to amounts the plan received in a 
  fied settlement income was received, and                           direct transfer or rollover from one of the other plans 
                                                                     listed here or an IRA).
• Treated as part of your cost basis (investment in the 
  contract) that isn’t taxable when distributed.                   5% rate on certain early distributions from deferred 
                                                                   annuity contracts. If an early withdrawal from a deferred 
                                                                   annuity is otherwise subject to the 10% additional tax, a 
Special Additional Taxes                                           5% rate may apply instead. A 5% rate applies to distribu-
                                                                   tions under a written election providing a specific sched-
To  discourage  the  use  of  pension  funds  for  purposes        ule for the distribution of your interest in the contract if, as 
other than normal retirement, the law imposes additional           of March 1, 1986, you had begun receiving payments un-
taxes on early distributions of those funds and on failures        der the election. On line 4 of Form 5329, multiply the line 3 
to withdraw the funds timely. Ordinarily, you won't be sub-        amount by 5% instead of 10%. Attach an explanation to 
ject to these taxes if you roll over all early distributions you   your return.
receive,  as  explained  earlier,  and  begin  drawing  out  the 
funds at a normal retirement age in prorated amounts over          Distributions from designated Roth accounts alloca-
your  life  expectancy.  These  special  additional  taxes  are    ble to in-plan Roth rollovers within the 5-year period. 
the taxes on:                                                      If, within the 5-year period starting with the first day of your 
                                                                   tax  year  in  which  you  rolled  over  an  amount  from  your 
• Early distributions, and                                         401(k),  403(b),  or  457(b)  plan  to  a  designated  Roth  ac-
• Excess accumulation (not receiving minimum distribu-             count,  you  take  a  distribution  from  the  designated  Roth 
  tions).                                                          account, you may have to pay the additional 10% tax on 
                                                                   early distributions. You must generally pay the 10% addi-
These taxes are discussed in the following sections.
                                                                   tional  tax  on  any  amount  attributable  to  the  part  of  the 
If  you  must  pay  either  of  these  taxes,  report  them  on    in-plan Roth rollover that you had to include in income (re-
Form 5329. However, you don't have to file Form 5329 if            capture  amount).  A  separate  5-year  period  applies  to 
you owe only the tax on early distributions and your Form          each  in-plan  Roth  rollover.  See Figuring  your  recapture 
1099-R correctly shows code “1” in box 7. Instead, enter           amount, later, to determine the recapture amount, if any.
10% of the taxable part of the distribution on Schedule 2          The  5-year  period  used  for  determining  whether  the 
(Form 1040), line 8. Also check the box on line 8 to indi-         10% early distribution tax applies to a distribution alloca-
cate that you don't have to file Form 5329.                        ble to an in-plan Roth rollover is separately determined for 
                                                                   each in-plan Roth rollover, and isn't necessarily the same 
Even if you don't owe any of these taxes, you may have             as the 5-year period used for determining whether a distri-
to complete Form 5329 and attach it to your Form 1040,             bution is a qualified distribution.
1040-SR, or 1040-NR. This applies if you meet an excep-
tion to the tax on early distributions but box 7 of your Form      Figuring your recapture amount.        For any early dis-
1099-R doesn't indicate an exception.                              tribution in 2022 from your designated Roth account that 
                                                                   is  allocable  to  an  in-plan  Roth  rollover,  you  allocate  the 
                                                                   amount  from  box  10  of  your  2022  Form  1099-R  to  the 
Tax on Early Distributions                                         amounts, if any, you have rolled over into that designated 
                                                                   Roth account.
Most  distributions  (both  periodic  and  nonperiodic)  from 
                                                                   If you haven’t taken a distribution from your designated 
qualified  retirement  plans  and  nonqualified  annuity  con-
                                                                   Roth  account  before  2022,  then  allocate  the  amount  in 
tracts made to you before you reach age 59 /  are subject 1 2
                                                                   box 10 of your 2022 Form 1099-R to the amounts you re-
to an additional tax of 10%. This tax applies to the part of 
                                                                   ported on the lines listed in the Recapture Allocation Chart 
the distribution that you must include in gross income. It 
                                                                   (filling in the Taxable column first, and then the Nontaxa-
doesn't apply to any part of a distribution that is tax free, 
                                                                   ble column for each year) until you have covered the en-
such  as  amounts  that  represent  a  return  of  your  cost  or 
                                                                   tire amount in box 10.
that  were  rolled  over  to  another  retirement  plan.  It  also 
                                                                   If  you  have  taken  a  distribution  from  your  designated 
doesn’t  apply  to corrective  distributions  of  excess  defer-
                                                                   Roth  account  prior  to  2022,  then  allocate  the  amount  in 
rals, excess contributions, or excess aggregate contribu-
                                                                   box 10 of your 2022 Form 1099-R to the amounts you re-
tions  (discussed  earlier  under   Taxation  of  Nonperiodic 
                                                                   ported on the lines listed in the Recapture Allocation Chart 
Payments).
                                                                   (filling in the Taxable column first, and then the Nontaxa-
For this purpose, a qualified retirement plan is:                  ble column for each year). However, don't start at the be-
                                                                   ginning; instead, begin with the first line that hasn’t been 
• A qualified employee plan (including a qualified cash            used fully for a previous distribution.
  or deferred arrangement (CODA) under Internal Reve-
  nue Code section 401(k)),
• A qualified employee annuity plan,

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Recapture Allocation Chart                                                              Keep for Your Records
Taxable 
Year          Taxable                                                 Nontaxable (Basis)
2010          Form 8606, line 23 . . . . . . . .                      Form 8606, line 22 . . . . . . . . . . .               
2011          Form 1040, line 16b;* Form                              Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                               1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                     1040NR, line 17a** . . . . . . . . . . .               
2012          Form 1040, line 16b;* Form                              Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                               1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                     1040NR, line 17a** . . . . . . . . . . .               
2013          Form 1040, line 16b;* Form                              Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                               1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                     1040NR, line 17a** . . . . . . . . . . .               
2014          Form 1040, line 16b;* Form                              Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                               1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                     1040NR, line 17a** . . . . . . . . . . .               
2015          Form 1040, line 16b;* Form                              Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                               1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                     1040NR, line 17a** . . . . . . . . . . .               
2016          Form 1040, line 16b;* Form                              Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                               1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                     1040NR, line 17a** . . . . . . . . . . .               
2017          Form 1040, line 16b;* Form                              Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                               1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                     1040NR, line 17a** . . . . . . . . . . .               
2018          Form 1040, line 4b;* or 
              Form 1040NR,                                            Form 1040, line 4a;** or Form 
              line 17b* . . . . . . . . . . . . . . . . .             1040NR, line 17a** . . . . . . . . . . .               
2019          Form 1040, line 4d;* or 
              Form 1040-NR,                                           Form 1040, line 4c;** or Form 
              line 17b* . . . . . . . . . . . . . . . . .             1040-NR, line 17a** . . . . . . . . . .                
2020          Form 1040, 1040-SR, or                                  Form 1040, 1040-SR, or 
              1040-NR, line 5b* . . . . . . . . .                     1040-NR, line 5a** . . . . . . . . . . .               
2021          Form 1040, 1040-SR, or                                  Form 1040, 1040-SR, or 
              1040-NR, line 5b* . . . . . . . . .                     1040-NR, line 5a** . . . . . . . . . . .               
2022          Form 1040, 1040-SR, or                                  Form 1040, 1040-SR, or 
              1040-NR, line 5b* . . . . . . . . .                     1040-NR, line 5a** . . . . . . . . . . .               
              Total . . . . . . . . . . . . . . . . . . . . .         Total . . . . . . . . . . . . . . . . . . . . . . . .  
Note. The sum of the totals for each column should equal the amount reported in box 10 of your 2022 Form 1099-R.
* Only include those amounts attributable to an in-plan Roth rollover.
** Only include any contributions (usually box 5 of Form 1099-R) that were taxable to you when made and attributable to an in-plan 
Roth rollover.

Your recapture amount is the sum of the amounts you                   In December 2022, at age 57, you took a distribution of 
allocated  for  2011  through  2022  under  the  Taxable  col-        $35,000  from  your  designated  Roth  account.  The  2022 
umn  in  the Recapture  Allocation  Chart.  You  will  also  in-      Form 1099-R shows the distribution of $35,000 reported 
clude this amount on Form 5329, line 1.                               in box 1, the taxable portion of the distribution of $3,500 
                                                                      reported in box 2a, and the amount of $31,500 allocable 
Example.      You had an in-plan Roth rollover in 2022 of             to the in-plan Roth rollover reported in box 10. Because 
$50,000. This is your first in-plan Roth rollover. Your 2022          you had no in-plan Roth rollovers in prior years, you would 
Form 1040 or 1040-SR includes $30,000 on line 5b, the                 allocate the $31,500 reported in box 10 of Form 1099-R 
taxable portion of the in-plan Roth rollover, and $50,000             as shown in the Example Recapture Allocation Chart.
on line 5a, the in-plan Roth rollover including $20,000 of            The  recapture  amount,  the  amount  subject  to  tax  on 
basis.                                                                early distributions allocable to the in-plan Roth rollover, is 

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$30,000 ($31,500 − $1,500). Your amount subject to tax                box 7, you must file Form 5329. Enter the taxable amount 
on  early  distributions  reported  on  Form  5329,  line  1,  for    of the distribution shown in box 2a of your Form 1099-R 
this  distribution  is  $33,500  ($30,000  allocable  to  Form        on line 1 of Form 5329. On line 2, enter the amount that 
1040  or  1040-SR,  line  5b;  and  $3,500  from  box  2a  of         can be excluded and the exception number shown in the 
Form 1099-R).                                                         Form 5329 instructions.
Exceptions to tax. Certain early distributions are excep-                  If  distribution  code  “1”  is  incorrectly  shown  on 
ted from the early distribution tax. If the payer knows that           TIP your  Form  1099-R  for  a  distribution  received 
an exception applies to your early distribution, distribution              when  you  were  age  59 /   or  older,  include  that 1 2
code “2,” “3,” or “4” should be shown in box 7 of your Form           distribution  on  Form  5329.  Enter  exception  number  “12” 
1099-R  and  you  don't  have  to  report  the  distribution  on      on line 2.
Form  5329.  If  an  exception  applies  but  distribution  code 
“1”  (early  distribution,  no  known  exception)  is  shown  in 

Example Recapture Allocation Chart                                                           Keep for Your Records
Taxable 
Year          Taxable                                                  Nontaxable (Basis)
2010          Form 8606, line 23 . . . . . . . .                       Form 8606, line 22 . . . . . . . . . . .                  
2011          Form 1040, line 16b;* Form                               Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                                1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                  
2012          Form 1040, line 16b;* Form                               Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                                1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                  
2013          Form 1040, line 16b;* Form                               Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                                1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                   
2014          Form 1040, line 16b;* Form                               Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                                1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                   
2015          Form 1040, line 16b;* Form                               Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                                1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                   
2016          Form 1040, line 16b;* Form                               Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                                1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                   
2017          Form 1040, line 16b;* Form                               Form 1040, line 16a;** Form 
              1040A, line 12b;* or Form                                1040A, line 12a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                   
2018          Form 1040, line 4b;* or Form                             Form 1040, line 4a;** or Form 
              1040NR, line 17b* . . . . . . . . .                      1040NR, line 17a** . . . . . . . . . . .                   
2019          Form 1040, line 4d;* or Form                             Form 1040, line 4c;** or Form 
              1040-NR, line 17b* . . . . . . . .                       1040-NR, line 17a** . . . . . . . . . .                    
2020          Form 1040, 1040-SR, or                                   Form 1040, 1040-SR, or 
              1040-NR, line 5b* . . . . . . . . .                      1040-NR, line 5a** . . . . . . . . . . .                   
2021          Form 1040, 1040-SR, or                                   Form 1040, 1040-SR, or 
              1040-NR, line 5b* . . . . . . . . .                      1040-NR, line 5a** . . . . . . . . . . .                   
2022          Form 1040, 1040-SR, or                                   Form 1040, 1040-SR, or 
              1040-NR, line 5b* . . . . . . . . .              $30,000 1040-NR, line 5a** . . . . . . . . . . .                  $1,500
              Total . . . . . . . . . . . . . . . . . . . . .  $30,000 Total    . . . . . . . . . . . . . . . . . . . . . . . .  $1,500
Note. The sum of the totals for each column should equal the amount reported in box 10 of your 2022 Form 1099-R.
* Only include those amounts attributable to an in-plan Roth rollover.
** Only include any contributions (usually box 5 of Form 1099-R) that were taxable to you when made and attributable to an in-plan 
Roth rollover.

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General  exceptions.     The  tax  doesn’t  apply  to  distri-   • From an employee stock ownership plan for dividends 
butions that are:                                                  on employer securities held by the plan;
• Made as part of a series of substantially equal periodic       • From a qualified retirement plan due to an IRS levy of 
  payments (made at least annually) for your life (or life         the plan;
  expectancy) or the joint lives (or joint life expectan-
                                                                 • From elective deferral accounts under 401(k) or 
  cies) of you and your designated beneficiary (if from a 
                                                                   403(b) plans, or similar arrangements, that are quali-
  qualified retirement plan, the payments must begin af-
                                                                   fied reservist distributions;
  ter separation from service) (see Substantially equal 
  periodic payments, later);                                     • Phased retirement annuity payments made to federal 
                                                                   employees (see Pub. 721 for more information on the 
• Made because you are totally and permanently disa-
                                                                   phased retirement program); or
  bled (see Note, later);
                                                                 • From a qualified retirement plan (other than an IRA) 
• Made to you because you are terminally ill; or
                                                                   for a qualified birth or adoption (for more information, 
• Made on or after the death of the plan participant or            see Qualified birth or adoption distributions, later).
  contract holder.
                                                                 Separation  from  service.     In  order  to  meet  the  re-
Disabled. You are considered disabled if you can furnish         quirements  for  the  first  exception  in  the  list  above,  you 
proof that you can't do any substantial gainful activity be-     must have separated from service in or after the year in 
cause  of  your  physical  or  mental  condition.  A  physician  which  you  reach  age  55  (or  age  50  for  qualified  public 
must determine that your condition can be expected to re-        safety  employees).  You  can’t  separate  from  service  be-
sult in death or be of a long, continued, or indefinite dura-    fore  that  year,  wait  until  you  are  age  55  (or  age  50  for 
tion.                                                            qualified public safety employees), and take a distribution.

Terminally  ill  individuals. Beginning  on  December  30,       Example.   George separated from service from his em-
2022, you are able to take a distribution from a qualified       ployer at age 49. In the year he reached age 55, he took a 
retirement plan before reaching age 59  /  and not have to 1 2   distribution from his retirement plan. Because he separa-
pay the 10% additional tax on early distributions if you re-     ted from service before he reached age 55, he didn’t meet 
ceive the distribution on or after the date you have been        the requirements for the exception for a distribution made 
determined to be terminally ill by a physician.                  from a qualified retirement plan (other than an IRA) after 
                                                                 separating from service in or after reaching age 55 (age 
Terminally ill.   You are considered terminally ill if you       50 for qualified public safety employees).
are certified by a physician as having an illness or physi-
cal condition which can reasonably be expected to result         Qualified  public  safety  employees.     If  you  are  a 
in death in 84 months or less after the date of the certifica-   qualified public safety employee, distributions made from 
tion.                                                            a governmental retirement plan aren’t subject to the addi-
                                                                 tional tax on early distributions. You are a qualified public 
Amount  may  be  repaid.      You  may  repay  an  amount        safety  employee  if  you  provided  police  protection,  fire-
you  received  because  you  are  certified  terminally  ill  by fighting  services,  or  emergency  medical  services  for  a 
making one or more contributions to the plan as long as          state or municipality, and you separated from service in or 
the total of those contributions do not exceed the amount        after the year you attained age 50.
distributed to you as a terminally ill individual.               For  tax  years  beginning  after  2015,  the  definition  of 
Additional  exceptions  for  qualified  retirement               qualified public safety employees is expanded to include:
plans. The tax doesn’t apply to distributions that are:          • Federal law enforcement officers,
• From a qualified retirement plan (other than an IRA)           • Federal customs and border protection officers,
  after your separation from service in or after the year 
  you reached age 55 (age 50 for qualified public safety         • Federal firefighters,
  employees) (see Separation from service, later);               • Air traffic controllers,
• From a qualified retirement plan (other than an IRA) to        • Nuclear materials couriers,
  an alternate payee under a qualified domestic rela-
                                                                 • Members of the United States Capitol Police,
  tions order;
                                                                 • Members of the Supreme Court Police, and
• From a qualified retirement plan to the extent you 
  have deductible medical expenses that exceed 7.5%              • Diplomatic security special agents of the United 
  of your adjusted gross income, whether or not you                States Department of State.
  itemize your deductions for the year;                          Qualified reservist distributions. A qualified reserv-
• From an employer plan under a written election that            ist  distribution  isn’t  subject  to  the  additional  tax  on  early 
  provides a specific schedule for distribution of your          distributions. A qualified reservist distribution is a distribu-
  entire interest if, as of March 1, 1986, you had separa-       tion (a) from elective deferrals under a section 401(k) or 
  ted from service and had begun receiving payments              403(b) plan, or a similar arrangement; (b) to an individual 
  under the election;                                            ordered or called to active duty (because they are a mem-
                                                                 ber of a reserve component) for a period of more than 179 

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days or for an indefinite period; and (c) made during the For information on these methods, see Notice 2022-6 at
period beginning on the date of the order or call and end- IRS.gov/irb/2022-05_IRB#NOT-2022-06.
ing at the close of the active duty period. You must be or-
A change from method (2) or (3) to method (1)
dered or called to active duty after September 11, 2001.
TIP isn’t treated as a modification to which the recap-
You can choose to recontribute part or all of the ture tax (discussed next) applies.
TIP distributions to an IRA. These additional contribu-
tions must be made within 2 years after your ac- Note. For a series of substantially equal periodic pay-
tive-duty period ends. Any amount recontributed must be ments in 2022, you may apply the guidance either in No-
reported on Form 8606 as a nondeductible contribution. tice 2022-6 at IRS.gov/irb/2022-05_IRB#NOT-2022-06, or
You can’t take a deduction for these contributions. How- in Revenue Ruling 2002-62 which is on page 710 of Inter-
ever, the normal dollar limitations for contributions to IRAs nal Revenue Bulletin 2002-42 at IRS.gov/pub/irs-irbs/
don't apply to these special contributions, and you can irb02-42.pdf.
make regular contributions to your IRA, up to the amount
otherwise allowable. Recapture tax for changes in distribution method
under equal payment exception. An early distribution
Qualified birth or adoption distributions. A quali- recapture tax may apply if, before you reach age 59 / , the 1 2
fied birth or adoption distribution isn't subject to the addi- distribution method under the equal periodic payment ex-
tional tax on early distributions. An individual can receive ception changes (for reasons other than your death or dis-
up to $5,000 from an applicable eligible retirement plan for ability). The tax applies if the method changes from the
a distribution made during the 1-year period beginning on method requiring equal payments to a method that
the date on which a child of the individual is born or the wouldn’t have qualified for the exception to the tax. The
date on which the legal adoption by the individual of an el- recapture tax applies to the first tax year to which the
igible adoptee is finalized. For more information on quali- change applies. The amount of tax is the amount that
fied birth or adoption distributions, see Notice 2020-68, would have been imposed had the exception not applied,
which is on page 567 of Internal Revenue Bulletin (IRB) plus interest for the deferral period.
2020-38 at IRS.gov/pub/irs-irb20-38.pdf. The recapture tax also applies after you reach age
59 / if your payments under a distribution method that 1 2
Additional exceptions for nonqualified annuity qualifies for the exception are modified within 5 years of
contracts. The tax doesn’t apply to distributions that are: the date of the first payment. In that case, the tax applies
• From a deferred annuity contract to the extent alloca- only to payments distributed before you reach age 59 / .1 2
ble to investment in the contract before August 14, Report the recapture tax and interest on line 4 of Form
1982; 5329. Attach an explanation to the form. Don’t enter the
explanation next to the line or enter any amount for the re-
• From a deferred annuity contract under a qualified capture on line 1 or 3 of the form.
personal injury settlement;

• From a deferred annuity contract purchased by your Tax on Excess Accumulation
employer upon termination of a qualified employee
plan or qualified employee annuity plan and held by To make sure that most of your retirement benefits are
your employer until your separation from service; or paid to you during your lifetime, rather than to your benefi-
• From an immediate annuity contract (a single pre- ciaries after your death, the payments that you receive
mium contract providing substantially equal annuity from qualified retirement plans must begin no later than
payments that start within 1 year from the date of pur- your required beginning date (defined later). The pay-
chase and are paid at least annually). ments each year can’t be less than the RMD.
If the actual distributions to you in any year are less
Substantially equal periodic payments. Payments
than the RMD for that year, you are subject to an addi-
are substantially equal periodic payments if they are made
tional tax. The tax equals 50% of the part of the RMD that
in accordance with one of the following methods.
wasn’t distributed.
1. Required minimum distribution method. Under For this purpose, a qualified retirement plan includes:
this method, the resulting annual payment is redeter-
mined for each year. • A qualified employee plan,
2. Fixed amortization method. Under this method, the • A qualified employee annuity plan,
resulting annual payment is determined once for the • An eligible section 457 deferred compensation plan,
first distribution year and remains the same amount or
for each succeeding year.
• A tax-sheltered annuity plan (403(b) plan) (for benefits
3. Fixed annuitization method. Under this method, the accruing after 1986).
resulting annual payment is determined once for the
first distribution year and remains the same amount Waiver. The tax may be waived if you establish that the
for each succeeding year. shortfall in distributions was due to reasonable error and
that reasonable steps are being taken to remedy the
shortfall. If you believe you qualify for this relief, you must

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file  Form  5329,  on  the  dotted  line  next  to  line  54  enter death and the employee dies after the required beginning 
“RC”  and  the  amount  you  want  waived  in  parentheses,         date, any payments not made as of the time of death must 
and  attach  a  letter  of  explanation.  Subtract  this  amount    generally  be  distributed  at  least  as  rapidly  as  under  the 
from  the  total  shortfall  you  figured  without  regard  to  the distribution method being used at the date of death.
waiver and enter the result on line 54.                             In addition, if distributions are being made from a de-
                                                                    fined contribution plan and the employee's beneficiary is 
State insurer delinquency proceedings.  You might 
                                                                    not an eligible designated beneficiary, any payments not 
not receive the minimum distribution because assets are 
                                                                    made as of the time of death must be distributed within 10 
invested in a contract issued by an insurance company in 
                                                                    years after the death of the employee. An eligible designa-
state  insurer  delinquency  proceedings.  If  your  payments 
                                                                    ted beneficiary is the employee's spouse, the employee's 
are  reduced  below  the  minimum  because  of  these  pro-
                                                                    child who has not reached majority, a disabled individual, 
ceedings, you should contact your plan administrator. Un-
                                                                    a chronically ill individual, or an individual not more than 
der certain conditions, you won’t have to pay the 50% ex-
                                                                    10 years younger than the employee.
cise tax.
                                                                    If  the  employee  dies  before  the  required  beginning 
Required beginning date.        Unless the rule for 5% own-         date, the entire account must be distributed under one of 
ers applies, you must generally begin to receive distribu-          the following rules.
tions from your qualified retirement plan by April 1 of the         • Rule 1. The distribution must be completed by De-
year that follows the later of:                                       cember 31 of the 5th year following the year of the 
• The calendar year in which you reach age 72, or                     employee's death if the employee was a participant in 
                                                                      a defined benefit plan or if there's no designated ben-
• The calendar year in which you retire from employ-                  eficiary.
  ment with the employer maintaining the plan.
                                                                    • Rule 2. The distribution must be completed by De-
However,  your  plan  may  require  you  to  begin  to  receive       cember 31 of the 10th year following the year of the 
distributions by April 1 of the year that follows the year in         employee's death if the employee was a participant in 
which you reach age 72 even if you haven’t retired.                   a defined contribution plan and designated an individ-
5% owners.       If you are a 5% owner, you must begin to             ual as the beneficiary under the plan.
receive distributions from the plan by April 1 of the year          • Rule 3. The distribution must be made in annual 
that follows the calendar year in which you reach age 72.             amounts over the life of an individual designated as a 
This rule doesn’t apply if your retirement plan is a govern-          beneficiary under a defined benefit plan or life expect-
mental or church plan.                                                ancy of an eligible designated beneficiary under a de-
You are a 5% owner if, for the plan year ending in the                fined contribution plan.
calendar year in which you reach age 72, you own (or are 
                                                                    The  terms  of  the  plan  may  determine  which  of  these 
considered to own under section 318 of the Internal Reve-
                                                                    three rules applies. If the plan permits the employee or the 
nue  Code)  more  than  5%  of  the  outstanding  stock  (or 
                                                                    eligible designated beneficiary to choose the rule that ap-
more than 5% of the total voting power of all stock) of the 
                                                                    plies, this choice must be made by the earliest date a dis-
employer, or more than 5% of the capital or profits interest 
                                                                    tribution would be required under either of the rules. Gen-
in the employer.
                                                                    erally, this date is December 31 of the year following the 
Required distributions. By the required beginning date,             year of the employee's death.
you must either:                                                    If  the  employee  or  the  eligible  designated  beneficiary 
                                                                    didn’t choose a rule and the plan doesn’t specify the rule 
• Receive your entire interest in the plan (for a tax-shel-         that applies, distribution must be made under Rule 3 if the 
  tered annuity, your entire benefit accruing after 1986),          employee has an eligible designated beneficiary (or in the 
  or                                                                case of a defined benefit plan, an individual was designa-
• Begin receiving periodic distributions in annual                  ted as the beneficiary under the plan) or under Rule 2 if 
  amounts calculated to distribute your entire interest             the employee was a participant in a defined contribution 
  (for a tax-sheltered annuity, your entire benefit accru-          plan, and has designated an individual as the beneficiary 
  ing after 1986) over your life or life expectancy or over         under the plan, but that individual isn't an eligible designa-
  the joint lives or joint life expectancies of you and a           ted beneficiary. If an employee doesn't have a designated 
  designated beneficiary (or over a shorter period).                beneficiary, distribution must be made under Rule 1.
                                                                    Distributions under Rule 3 must generally begin by De-
After  the  starting  year  for  periodic  distributions,  you 
                                                                    cember 31 of the year following the year of the employee's 
must receive at least the RMD for each year by December 
                                                                    death. However, if the surviving spouse is the beneficiary, 
31 of that year. (The starting year is the year in which you 
                                                                    distributions need not begin until December 31 of the year 
reach  age  72  or  retire,  whichever  applies  in  determining 
                                                                    the employee would have reached age 72, if later.
your required beginning date.) If no distribution is made in 
                                                                    If  the  surviving  spouse  is  the  designated  beneficiary 
your  starting  year,  the  RMDs  for  2  years  must  be  made 
                                                                    and distributions are to be made under Rule 3, a special 
the following year (one by April 1 and one by December 
                                                                    rule applies if the spouse dies after the employee but be-
31).
                                                                    fore distributions are required to begin. In this case, distri-
Distributions after the employee's death.     If the em-            butions  may  be  made  to  the  spouse's  beneficiary  under 
ployee  was  receiving  periodic  distributions  before  their      either Rule 1, Rule 2, or Rule 3 as though the beneficiary 

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were the employee's beneficiary and the employee died Estate tax deduction. You may be entitled to a deduc-
on the spouse's date of death. However, if the surviving tion for estate tax if you receive amounts included in your
spouse remarries after the employee's death and the new income as income in respect of a decedent under a joint
spouse is designated as the spouse's beneficiary, this and survivor annuity that was included in the decedent's
special rule applicable to surviving spouses doesn’t apply estate. You can deduct the part of the total estate tax that
to the new spouse. was based on the annuity, provided that the decedent
If distributions from a defined contribution plan began died after their annuity starting date. (For details, see Reg-
under Rule 3 and the eligible designated beneficiary dies ulations section 1.691(d)-1.) Deduct it in equal amounts
or a beneficiary who is a minor child reaches majority, dis- over your remaining life expectancy.
tributions must be completed by December 31 of the 10th If the decedent died before the annuity starting date of
year following the year of the beneficiary's death or the a deferred annuity contract and you receive a death bene-
child reaching majority. fit under that contract, the amount you receive (either in a
lump sum or as periodic payments) in excess of the dece-
Minimum distributions from an annuity plan. Special dent's cost is included in your gross income as income in
rules may apply if you receive distributions from your re- respect of a decedent for which you may be able to claim
tirement plan in the form of an annuity. Your plan adminis- an estate tax deduction.
trator should be able to give you information about these You can take the estate tax deduction as an itemized
rules. deduction on Schedule A (Form 1040). This deduction
isn’t subject to the 2%-of-adjusted-gross-income limit on
Minimum distributions from an individual account
miscellaneous deductions. See Pub. 559, Survivors, Ex-
plan. Your plan administrator should be able to give you
ecutors, and Administrators, for more information on the
information about how the amount of your RMD was fig-
estate tax deduction.
ured.
If there is an account balance to be distributed from Survivors of employees. Distributions the beneficiary of
your plan (not as an annuity), your plan administrator must a deceased employee gets may be accrued salary pay-
figure the minimum amount that must be distributed from ments; distributions from employee profit-sharing, pen-
the plan each year. sion, annuity, or stock bonus plans; or other items. Some
What types of installments are allowed? The mini- of these should be treated separately for tax purposes.
mum amount that must be distributed for any year may be The treatment of these distributions depends on what they
made in a series of installments (for example, monthly or represent.
quarterly) as long as the total payments for the year made Salary or wages paid after the death of the employee
by the date required aren’t less than the minimum amount are usually the beneficiary's ordinary income. If you are a
required for the year. beneficiary of an employee who was covered by any of
the retirement plans mentioned, you can exclude from in-
More than minimum. Your plan can distribute more in come nonperiodic distributions received that totally relieve
any year than the minimum amount required for that year; the payer from the obligation to pay an annuity. The
but if it does, you won’t receive credit for the additional amount that you can exclude is equal to the deceased
amount in determining the minimum amount required for employee's investment in the contract (cost).
future years. However, any amount distributed in your If you are entitled to receive a survivor annuity on the
starting year will be credited toward the amount required death of an employee, you can exclude part of each annu-
to be distributed by April 1 of the following year. ity payment as a tax-free recovery of the employee's in-
vestment in the contract. You must figure the taxable and
Combining multiple accounts to satisfy the minimum tax-free parts of each payment using the method that ap-
distribution requirements. Generally, the RMD must be plies as if you were the employee. For more information,
figured separately for each account. Each qualified em- see Taxation of Periodic Payments, earlier.
ployee retirement plan and qualified annuity plan must be
considered individually in satisfying its distribution require- Survivors of retirees. Benefits paid to you as a survivor
ments. However, if you have more than one tax-sheltered under a joint and survivor annuity must be included in your
annuity account, you can total the RMDs and then satisfy gross income. Include them in income in the same way
the requirement by taking distributions from any one (or the retiree would have included them in gross income.
more) of the tax-sheltered annuities. See Partly Taxable Payments under Taxation of Periodic
Payments, earlier.
If the retiree reported the annuity under the 3-year Rule
Survivors and Beneficiaries and recovered all of the cost tax free, your survivor pay-
ments are fully taxable.
Generally, a survivor or beneficiary reports pension or an- If the retiree was reporting the annuity under the Gen-
nuity income in the same way the plan participant would eral Rule, you must apply the same exclusion percentage
have reported it. However, some special rules apply, and to your initial survivor annuity payment called for in the
they are covered elsewhere in this publication as well as contract. The resulting tax-free amount will then remain
in this section. fixed for the initial and future payments. Increases in the
survivor annuity are fully taxable. See Pub. 939 for more
information on the General Rule.

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If the retiree was reporting the annuity under the Simpli- If you received a distribution from an eligible retirement
fied Method, the part of each payment that is tax free is plan to purchase or construct a main home but didn’t pur-
the same as the tax-free amount figured by the retiree at chase or construct a main home because of a major dis-
the annuity starting date. This amount remains fixed even aster, you may be able to repay the distribution and not
if the annuity payments are increased or decreased. See pay income tax or the 10% additional tax on early distribu-
Simplified Method under Taxation of Periodic Payments, tions. See Recontribution of Qualified Distributions for the
earlier. Purchase or Construction of a Main Home, later.
Guaranteed payments. If you receive guaranteed Use Forms 8915-C, 8915-D, and 8915-F to report
payments as the decedent's beneficiary under a life annu- qualified disaster distributions and repayments. Also re-
ity contract, don’t include any amount in your gross in- port recontributions of qualified distributions for home pur-
come until your distributions plus the tax-free distributions chases and construction that were canceled because of
received by the life annuitant equal the cost of the con- qualified 2018, 2019, 2020, or later disasters on Form
tract. All later distributions are fully taxable. This rule 8915-C, 8915-D, or 8915-F, as applicable.
doesn’t apply if it is possible for you to collect more than
the guaranteed amount. For example, it doesn’t apply to Qualified Disaster Recovery
payments under a joint and survivor annuity.
Distributions

A qualified disaster recovery distribution is a qualified dis-
Disaster-Related Relief aster distribution that meets certain criteria as described
in the SECURE 2.0 Act of 2022. It is a distribution made
from an eligible retirement plan to an individual whose
Introduction
main home was in a qualified disaster area during the pe-
Special rules apply to tax-favored withdrawals, income in- riod described in Qualified disaster recovery distribution,
clusion, and repayments for individuals who suffered eco- later. This individual must have sustained an economic
nomic losses as a result of certain major disasters. See loss because of the disaster.
Qualified disaster recovery distributions, and Qualified
Main home (principal place of abode). Generally, your
Disaster Distributions, later, for more information.
main home is the home where you live most of the time. A
The principles set forth in Notice 2005-92, 2005-51 temporary absence due to special circumstances, such as
I.R.B. 1165, available at IRS.gov/irb/2005-51_IRB (which illness, education, business, military service, evacuation,
provides guidance on the tax-favored treatment of distri- or vacation, won’t change your main home.
butions for victims of Hurricane Katrina), and Notice
2020-50, 2020-28 I.R.B. 35, available at IRS.gov/IRB/ Qualified disaster. A qualified disaster means any dis-
2020-28_IRB (which provides guidance on the tax-fa- aster declared by the President under section 401 of the
vored treatment of distributions for individuals impacted Robert T. Stafford Disaster Relief and Emergency Assis-
by the coronavirus pandemic), generally also apply to tance Act after December 27, 2020.
these rules. Qualified disaster area. A qualified disaster area
If you received a qualified disaster recovery distribution means any area with respect to which the major disaster
or a qualified disaster distribution (both defined later), it is was declared under the Robert T. Stafford Disaster Relief
taxable, but isn’t subject to the 10% additional tax on early and Emergency Assistance Act. This term does not in-
distributions. The taxable amount is figured in the same clude any area which is a qualified disaster area solely by
manner as other IRA distributions. However, the distribu- reason of section 301 of the Taxpayer Certainty and Dis-
tion is included in income ratably over 3 years unless you aster Tax Relief Act of 2020.
elect to report the entire amount in the year of distribution. A qualified disaster area under section 301 of the
For example, if you received a $60,000 qualified disaster ! Taxpayer Certainty and Disaster Tax Relief Act of
distribution in 2020, you can include $20,000 in your in- CAUTION 2020 would be a major disaster that was declared
come in 2020, 2021, and 2022. However, you can elect to by the President during the period between January 1,
include the entire distribution in your income in the year it 2020, and February 25, 2021. Also, this disaster must
was received. Also, you can repay the distribution and not have an incident period that began on or after December
be taxed on the distribution. See Repayment of Qualified 28, 2019, and on or before December 27, 2020, and must
Disaster Distributions, later. have ended no later than January 26, 2021. The definition
Please be advised the distribution limit for quali- of a qualified disaster loss does not extend to any major
disaster which has been declared only by reason of
! fied disaster recovery distributions is not the same COVID-19.
CAUTION as the limit for qualified disaster distributions. See
Distribution limit for qualified disaster recovery distribu-
tions and Distribution limit for qualified disaster distribu- Incident period. The incident period for any qualified
tions, for more information. disaster is the period specified by the Federal Emergency
Management Agency (FEMA) as the period during which
the disaster occurred.

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Qualified disaster recovery distribution. A qualified period and who sustained an economic loss because of
disaster recovery distribution is any distribution: the disaster.
• Made on or after the first day of the incident period of Qualified disaster area for qualified disaster distri-
a qualified disaster and before the date that is 180 butions. A qualified disaster area is any area with re-
days after the applicable date with respect to such dis- spect to which a major disaster was declared after 2017
aster, and and before February 26, 2021, by the President under
• Made to an individual whose principal place of abode section 401 of the Robert T. Stafford Disaster Relief and
at any time during such qualified disaster is located in Emergency Assistance Act, except the California wildfire
the qualified disaster area, and disaster area defined in the Bipartisan Budget Act of
2018, or any area with respect to which a major disaster
• That individual has sustained an economic loss by has been declared solely due to COVID-19.
reason of such qualified disaster.
Incident period for qualified distributions. The inci-
Economic loss. Qualified disaster distributions are per- dent period for any qualified disaster is the period speci-
mitted without regard to your need or the actual amount of fied by the Federal Emergency Management Agency
your economic loss. Examples of an economic loss in- (FEMA) as the period during which the disaster occurred,
clude, but aren’t limited to: but not including any dates before 2018. This includes
those disasters that occurred on or after December 28,
1. Loss, damage to, or destruction of real or personal
2020, and continued no later than January 26, 2021.
property from fire, flooding, looting, vandalism, theft,
wind, or other cause; Qualified disaster distribution. A qualified disaster dis-
2. Loss related to displacement from your home; or tribution for 2018, 2019, and 2020 disasters are those dis-
tributions from an eligible retirement plan:
3. Loss of livelihood due to temporary or permanent lay-
offs. 1. Made on or after the first day of the incident period of
a qualified disaster and before June 17, 2020 (June
Eligible retirement plan. An eligible retirement plan can 25, 2021, for a qualified 2020 disaster);
be any of the following.
2. Made to an individual whose main home at any time
• A qualified pension, profit-sharing, or stock bonus during the incident period of such qualified disaster
plan (including a 401(k) plan). was in the qualified disaster area; and
• The federal Thrift Savings Plan. 3. That individual sustained an economic loss because
• A qualified annuity plan. of the disaster.

• A tax-sheltered annuity contract. Distribution limit for qualified disaster distributions.
• A governmental section 457 deferred compensation The total of your qualified disaster distributions from all
plan. plans is limited to $100,000 per disaster for certain major
disasters that occurred in 2018, 2019, and 2020. If you
• A traditional, SEP, SIMPLE, or Roth IRA. take distributions from more than one type of plan, such
Applicable date. The term applicable date means the as a 401(k) plan and an IRA, and the total amount of your
latest of: distributions exceeds $100,000 for a single disaster, you
may allocate the $100,000 limit among the plans by any
• December 29, 2022; reasonable method you choose.
• The first date of the incident period for the qualified
disaster; or Example. In 2020, you received a distribution of
$50,000. In 2021, you receive a distribution of $125,000
• The declaration date of the qualified disaster. for the same disaster. Separately, each distribution meets
the requirements for a qualified disaster distribution. If you
Distribution limit for qualified disaster recovery dis- decide to treat the entire $50,000 received in 2020 as a
tributions. The total of your qualified disaster recovery qualified disaster distribution, only $50,000 of the 2021
distributions from all plans is limited to $22,000 per disas- distribution can be treated as a qualified disaster distribu-
ter. If you take distributions from more than one type of tion for the same disaster.
plan, such as a 401(k) plan and an IRA, and the total
amount of your distribution exceeds $22,000, you may al-
locate the $22,000 limit among the plans by any reasona- Taxation of Qualified Disaster
ble method you choose. Distributions

Qualified disaster distributions are included in income in
Qualified Disaster Distributions
equal amounts over 3 years. However, if you elect, you
The definition of a qualified disaster distribution is a distri- can include the entire distribution in your income in the
bution made from an eligible retirement plan to an individ- year it was received.
ual whose main home was in a qualified disaster area Qualified disaster distributions aren’t subject to the
(described next) at any time during that disaster’s incident 10% additional tax (or the additional 25% tax for certain

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distributions from SIMPLE IRAs) on early distributions 2018 disaster distribution), a revised Form 8915-D (if the
from qualified retirement plans (including IRAs). Also, if repayment is of a qualified 2019 disaster distribution), or a
you are receiving substantially equal periodic payments revised Form 8915-F (in the case of qualified disasters
from a qualified retirement plan, the receipt of a qualified that occurred in 2020 and later years). See Amending
disaster distribution from that plan won't be treated as a Your Return, later.
change in those substantially equal payments merely be-
cause of the qualified disaster distribution. However, any Example. Maria received a $45,000 qualified disaster
distributions you received in excess of the $100,000 quali- distribution on November 1, 2020. After receiving reim-
fied disaster distribution limit may be subject to the addi- bursement from her insurance company for a casualty
tional tax on early distributions. loss, Maria repaid $45,000 of the qualified distribution on
March 31, 2021. She reported the distribution and the re-
payment on Form 8915-E, which she filed with her timely
Repayment of Qualified Disaster filed 2020 tax return. As a result, no portion of the distribu-
Distributions tion is included in income on her return.

If you choose, you can generally repay any portion of a Repayment of distributions if reporting under the
qualified disaster distribution that is eligible for tax-free 3-year method. If you are reporting the qualified disaster
rollover treatment to an eligible retirement plan. Also, you distribution in income over a 3-year period and you repay
can repay a qualified disaster distribution made on ac- any portion of the qualified disaster distribution to an eligi-
count of a hardship from a retirement plan. However, see ble retirement plan before filing your 2020 tax return, the
exceptions, later, for qualified disaster distributions you repayment will reduce the portion of the distribution that is
can't repay. included in income in 2020. If you repay a portion after the
You have 3 years from the day after the date you re- due date (including extensions) for filing your 2020 return,
ceived the distribution to make a repayment. The amount the repayment will reduce the portion of the distribution
of your repayment can't be more than the amount of the that is included in income on your 2021 return, unless you
original distribution. Amounts that are repaid are treated are eligible to amend your 2018, 2019, or 2020 return, as
as a trustee-to-trustee transfer and aren't included in in- applicable. If, during a year in the 3-year period, you repay
come. Also, for purposes of the one-rollover-per-year limi- more than is otherwise includible in income for that year,
tation for IRAs, a repayment to an IRA isn't considered a the excess may be carried forward or back to reduce the
rollover. For more information on how to report distribu- amount included in income for the year.

tions and repayments, see the Instructions for Form Example. John received a $90,000 qualified disaster
8915-C (in the case of qualified 2018 disasters), the In- distribution from his pension plan on November 15, 2019.
structions for Form 8915-D (in the case of qualified 2019 He doesn't elect to include the entire distribution in his
disasters), or the Instructions for Form 8915-F (in the case 2019 income, but elects to include $30,000 on each of his
of qualified disasters that occurred in 2020 and later 2019, 2020, and 2021 returns. On November 10, 2020,
years). John repays $45,000. He makes no other repayments
Exceptions. You can't repay the following types of distri- during the allowable 3-year period. John may report the
butions. distribution and repayment in either of the following ways.
1. Qualified disaster distributions received as a benefi- • Report $0 in income on his 2020 return, and carry the
ciary (other than as a surviving spouse). $15,000 excess repayment ($45,000 – $30,000) for-
ward to 2021 and reduce the amount reported in that
2. RMDs. year to $15,000.
3. Periodic payments (other than from an IRA) that are • Report $0 in income on his 2020 return, report
for: $30,000 on his 2021 return, and file an amended re-
turn for 2019 to reduce the amount previously inclu-
a. A period of 10 years or more,
ded in income to $15,000 ($30,000 – $15,000).
b. Your life or life expectancy, or
c. The joint lives or joint life expectancies of you and Recontribution of Qualified
your beneficiary. Distributions for the Purchase or
Repayment of distributions if reporting under the Construction of a Main Home

1-year election. If you elect to include all of your quali- If you received a qualified distribution to purchase or con-
fied disaster distributions received in a year in income for struct a main home in certain major disaster areas, you
that year and then repay any portion of the distributions can repay all or any part of that distribution to an eligible
during the allowable 3-year period, the amount repaid will retirement plan during the period beginning on the first
reduce the amount included in income for the year of dis- day of the incident period of a qualified disaster and end-
tribution. If the repayment is made after the due date (in- ing on June 17, 2020 (June 25, 2021, for qualified 2020
cluding extensions) for your return for the year of distribu- distributions).
tion, you will need to file, with an amended return, a
revised Form 8915-C (if the repayment is of a qualified

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To be a qualified distribution, the distribution must meet 1. Your principal residence at any time during that disas-
all of the following requirements. ter’s incident period is located in the qualified disaster
area with respect to the disaster; and
• The distribution is a hardship distribution from a
401(k) plan, a hardship distribution from a tax-shel- 2. You have experienced an economic loss because of
tered annuity plan (403(b) plan), or a qualified the disaster.
first-time homebuyer distribution from an IRA.
Examples of an economic loss include, but aren't limi-
• The distribution was received during the period begin- ted to:
ning on the date that is 180 days before the first day of
the incident period of the qualified disaster and ending • Loss, damage to, or destruction of real or personal
on the date that is 30 days after the last day of such property from fire, flooding, looting, vandalism, theft,
incident period. wind, or other cause;
• The distribution was to be used to purchase or con- • Loss related to displacement from your home; or
struct a main home in the disaster area and the home • Loss of livelihood due to temporary or permanent lay-
wasn't purchased or constructed because of the dis- offs.
aster.
Limits on plan loans. The $50,000 limit on plan loans is
Any amount that is recontributed during the period be- increased to a maximum of $100,000. Also, the additional
ginning on the first day of the incident period of such quali- 50% of the present value of your nonforfeitable vested ac-
fied disaster and ending on June 17, 2020 (June 25, crued benefit limit is increased to 100%.
2021, for qualified 2020 distributions), is treated as a The higher limits apply to loans made during the follow-
trustee-to-trustee transfer and isn't included in income. ing periods.
Also, for purposes of the one-rollover-per-year limitation
for IRAs, a repayment to an IRA isn't considered a roll- • Loans made during the period beginning on Septem-
over. ber 29, 2017 (or February 9, 2018, if in the California
wildfire disaster area), and ending on December 31,
A qualified distribution not recontributed before June 2018.
18, 2020 (June 25, 2021, for qualified 2020 distributions),
may be taxable for the year distributed and subject to the • Loans made during the period beginning on Decem-
additional 10% tax (or the additional 25% tax for certain ber 20, 2019, and ending on June 17, 2020, for quali-
SIMPLE IRAs) on early distributions. fied 2018 and 2019 disasters.
See Form 8915-C (for qualified 2018 disaster distribu- • Loans made during the period beginning December
27, 2020, and ending on June 24, 2021, for qualified
tions), Form 8915-D (for qualified 2019 disaster distribu-
2020 disasters.
tions), or Form 8915-F (for qualified 2020 disaster distri-
butions) if you received a qualified distribution that you • Loans made during the incident period of a disaster
repaid, in whole or in part, before June 18, 2020 (June 25, beginning on or after January 26, 2021, and ending
2021, for qualified 2020 distributions). 180-days after the applicable date for that disaster.
The applicable date for a qualified disaster would be
Recontributing a qualified home purchase distribu-
the latest of:
tion under the SECURE 2.0 Act of 2020. The require-
ments of the distribution are the same as a qualified home • January 26, 2021; or
purchase distribution received for a home purchase or
• The first day of the incident period with respect to the
construction. You must make the recontribution (or recon-
qualified disaster; or
tributions) during the applicable period for the disaster.
The applicable period for the disaster is the period be- • The date of the declaration with respect to the quali-
ginning on the first day of the incident period of such quali- fied disaster.
fied disaster and ending on the date that is 180 days after
the applicable date for that disaster. 1-year suspension of plan loan payments. Payments
on loans that become due during the period beginning on
the qualified beginning date and ending on the date that is
Loans From Qualified Plans 180 days after the last day of the incident period may be
suspended for 1 year (suspension period) by the adminis-
The following special rules are available to qualified indi-
trator. The qualified beginning date is:
viduals.
• Increase to the limit for loans from employer retire- • The first day of the incident period of a qualified 2018,
2019, or 2020 disaster.
ment plans.
• A 1-year suspension for payments due on plan loans. • The first day of the incident period of a qualified disas-
ter that was declared by the President under section
Qualified individual. You are a qualified individual if 401 of the Robert T. Stafford Disaster Relief and
both of the following apply. Emergency Assistance Act after December 27, 2020,
and which begins on or after January 26, 2021.

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If you are a qualified individual based on more than one If you make a repayment by the due date of your origi-
disaster, use the suspension period with the earliest be- nal return (including extensions), include the repayment
ginning date. on your amended return.

If you make a repayment after the due date of your orig-
Coronavirus-Related Distributions
inal return (including extensions), include it on your amen-
In tax year 2020, you were able to take a coronavirus-rela- ded return only if either of the following applies.
ted distribution from a retirement plan if that distribution • You elected to include all of your qualified disaster
was made: distributions in income in the year of the distributions
1. Before December 31, 2020; and (not over 3 years) on your original return.
2. To a qualified individual. • The amount of the repayment exceeds the portion of
the qualified disaster distributions that is includible in
Generally, you were a qualified individual if you, your income for 2021 and you choose to carry the excess
spouse, or dependent was diagnosed with the virus back to your 2019 or 2020 tax return.
SARS-Covid-2 or with coronavirus disease 2019
(COVID-19) or if you experienced adverse financial con- Example. You received a qualified disaster distribution
sequences as a result of the coronavirus pandemic. in the amount of $90,000 on October 16, 2019. You
choose to spread the $90,000 over 3 years ($30,000 in in-
Repayment of Qualified come for 2019, 2020, and 2021). On November 19, 2021,
you make a repayment of $45,000. For 2021, none of the
Coronavirus-Related Distributions
qualified disaster distribution is includible in income. The
The 1-year election. If you made a qualified coronavi- excess repayment of $15,000 can be carried back to 2020
rus-related distribution before December 31, 2020, you or 2019, as applicable.
could elect to include all that distribution in your income
for 2020 and then repay any portion of it during the allowa- Information for Eligible Retirement Plans
ble 3-year period. The amount repaid reduces the amount
included in income for the year of the distribution. A plan administrator may choose whether to treat a distri-
bution as a qualified 2018, 2019, and 2020 disaster distri-
The 3-year election. If you are reporting the qualified co- bution, or whether to accept a rollover of a qualified disas-
ronavirus-related distribution in income over a 3-year pe- ter distribution and may develop reasonable procedures
riod and, during a year in the 3-year period, you repay for determining whether distributions are qualified disaster
more than is otherwise includible income for that year, the distributions. However, the treatment of qualified disaster
excess may be carried forward or back to reduce the distributions must be consistent under each plan. The
amount included in income for the year. payment of a qualified disaster distribution to an individual
If the repayment is made after the due date (including must be reported on Form 1099-R. This reporting is re-
extensions) for your return for the year of distribution, you quired even if the individual recontributes the qualified dis-
will need to file a revised Form 8915-F. See Amending aster distribution to the same plan in the same year. If a
Your Return, later. payer is treating the payment as a qualified disaster distri-
bution and no other appropriate code applies, the payer is
Example. John received a $90,000 qualified coronavi- permitted to use distribution code “2” (early distribution,
rus-related distribution from his IRA on March 15, 2020. exception applies) in box 7 of Form 1099-R. However, a
He elected to include $30,000 on each of his 2020, 2021, payer in this case is also permitted to use distribution
and 2022 tax returns. John repaid $45,000 on November code “1” (early distribution, no known exception) in box 7
10, 2020. He makes no other repayments during the al- of Form 1099-R.
lowable 3-year period. John reported $0 in income on his
2020 return and carried the $15,000 excess repayment
Mandatory 60-Day Postponement
($45,000 – $30,000) to 2021 and reduces the amount he
reports to $15,000. John will report $30,000 on his 2022 Certain taxpayers affected by a federally declared disas-
tax return. ter that occurs after December 20, 2019, may be eligible
for a mandatory 60-day postponement for certain tax
Other Disaster Issues deadlines such as filing or paying income, excise, and
employment taxes; and making contributions to a tradi-
Amending Your Return tional IRA or Roth IRA.
If, after filing your original return, you make a repayment,
The period beginning on the earliest incident date
the repayment may reduce the amount of your qualified
specified in the disaster declaration and ending on the
disaster distributions that were previously included in in-
date that is 60 days after either the earliest incident date
come. Depending on when a repayment is made, you
or the date of the declaration, whichever is later, is the pe-
may need to file an amended tax return to refigure your
riod during which the deadlines are postponed. For infor-
taxable income.
mation about disaster relief available in your area, includ-
ing extensions, go to IRS News Around the Nation.

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                                                                    Using online tools to help prepare your return.       Go to 
                                                                    IRS.gov/Tools for the following.
How To Get Tax Help
                                                                    • The Earned Income Tax Credit Assistant IRS.gov/ (
If you have questions about a tax issue; need help prepar-            EITCAssistant) determines if you’re eligible for the 
ing your tax return; or want to download free publications,           earned income credit (EIC).
forms, or instructions, go to IRS.gov to find resources that        • The Online EIN Application IRS.gov/EIN ( ) helps you 
can help you right away.                                              get an employer identification number (EIN) at no 
                                                                      cost.
Preparing and filing your tax return.  After receiving all 
your wage and earnings statements (Forms W-2, W-2G,                 • The Tax Withholding Estimator IRS.gov/W4app (      ) 
1099-R,  1099-MISC,  1099-NEC,  etc.);  unemployment                  makes it easier for you to estimate the federal income 
compensation statements (by mail or in a digital format) or           tax you want your employer to withhold from your pay-
other  government  payment  statements  (Form  1099-G);               check. This is tax withholding. See how your withhold-
and  interest,  dividend,  and  retirement  statements  from          ing affects your refund, take-home pay, or tax due.
banks and investment firms (Forms 1099), you have sev-              • The First-Time Homebuyer Credit Account Look-up 
eral options to choose from to prepare and file your tax re-          (IRS.gov/HomeBuyer) tool provides information on 
turn.  You  can  prepare  the  tax  return  yourself,  see  if  you   your repayments and account balance.
qualify for free tax preparation, or hire a tax professional to 
prepare your return.                                                • The Sales Tax Deduction Calculator IRS.gov/ (
                                                                      SalesTax) figures the amount you can claim if you 
Free options for tax preparation.    Go to IRS.gov to see             itemize deductions on Schedule A (Form 1040).
your options for preparing and filing your return online or 
                                                                       Getting  answers  to  your  tax  questions.          On 
in your local community, if you qualify, which include the 
                                                                       IRS.gov,  you  can  get  up-to-date  information  on 
following.
                                                                       current events and changes in tax law.
• Free File. This program lets you prepare and file your 
                                                                    • IRS.gov/Help: A variety of tools to help you get an-
  federal individual income tax return for free using 
                                                                      swers to some of the most common tax questions.
  brand-name tax-preparation-and-filing software or 
  Free File fillable forms. However, state tax preparation          • IRS.gov/ITA: The Interactive Tax Assistant, a tool that 
  may not be available through Free File. Go to IRS.gov/              will ask you questions and, based on your input, pro-
  FreeFile to see if you qualify for free online federal tax          vide answers on a number of tax law topics.
  preparation, e-filing, and direct deposit or payment op-          • IRS.gov/Forms: Find forms, instructions, and publica-
  tions.                                                              tions. You will find details on the most recent tax 
• VITA. The Volunteer Income Tax Assistance (VITA)                    changes and interactive links to help you find answers 
  program offers free tax help to people with                         to your questions.
  low-to-moderate incomes, persons with disabilities,               • You may also be able to access tax law information in 
  and limited-English-speaking taxpayers who need                     your electronic filing software.
  help preparing their own tax returns. Go to IRS.gov/
  VITA, download the free IRS2Go app, or call 
  800-906-9887 for information on free tax return prepa-            Need someone to prepare your tax return?             There are 
  ration.                                                           various  types  of  tax  return  preparers,  including  enrolled 
                                                                    agents, certified public accountants (CPAs), accountants, 
• TCE. The Tax Counseling for the Elderly (TCE) pro-
                                                                    and many others who don’t have professional credentials. 
  gram offers free tax help for all taxpayers, particularly 
                                                                    If you choose to have someone prepare your tax return, 
  those who are 60 years of age and older. TCE volun-
                                                                    choose that preparer wisely. A paid tax preparer is:
  teers specialize in answering questions about pen-
  sions and retirement-related issues unique to seniors.            • Primarily responsible for the overall substantive accu-
  Go to IRS.gov/TCE, download the free IRS2Go app,                    racy of your return,
  or call 888-227-7669 for information on free tax return           • Required to sign the return, and
  preparation.
                                                                    • Required to include their preparer tax identification 
• MilTax. Members of the U.S. Armed Forces and                        number (PTIN).
  qualified veterans may use MilTax, a free tax service 
  offered by the Department of Defense through Military             Although  the  tax  preparer  always  signs  the  return, 
  OneSource. For more information, go to                            you're ultimately responsible for providing all the informa-
  MilitaryOneSource MilitaryOneSource.mil/MilTax (    ).            tion  required  for  the  preparer  to  accurately  prepare  your 
  Also, the IRS offers Free Fillable Forms, which can               return.  Anyone  paid  to  prepare  tax  returns  for  others 
  be  completed  online  and  then  filed  electronically  re-      should have a thorough understanding of tax matters. For 
  gardless of income.                                               more information on how to choose a tax preparer, go to 
                                                                    Tips for Choosing a Tax Preparer on IRS.gov.

                                                                    Coronavirus. Go  to IRS.gov/Coronavirus  for  links  to  in-
                                                                    formation on the impact of the coronavirus, as well as tax 

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relief available for individuals and families, small and large Note. Form 9000, Alternative Media Preference, or
businesses, and tax-exempt organizations. Form 9000(SP) allows you to elect to receive certain types
of written correspondence in the following formats.
Employers can register to use Business Services On-
line. The Social Security Administration (SSA) offers on- • Standard Print.
line service at SSA.gov/employer for fast, free, and secure • Large Print.
online W-2 filing options to CPAs, accountants, enrolled Braille.
•
agents, and individuals who process Form W-2, Wage
and Tax Statement, and Form W-2c, Corrected Wage and • Audio (MP3).
Tax Statement. • Plain Text File (TXT).
IRS social media. Go to IRS.gov/SocialMedia to see the • Braille Ready File (BRF).
various social media tools the IRS uses to share the latest
Disasters. Go to Disaster Assistance and Emergency
information on tax changes, scam alerts, initiatives, prod-
Relief for Individuals and Businesses to review the availa-
ucts, and services. At the IRS, privacy and security are
ble disaster tax relief.
our highest priority. We use these tools to share public in-
formation with you. Don’t post your social security number Getting tax forms and publications. Go to IRS.gov/
(SSN) or other confidential information on social media Forms to view, download, or print all the forms, instruc-
sites. Always protect your identity when using any social tions, and publications you may need. Or, you can go to
networking site. IRS.gov/OrderForms to place an order.
The following IRS YouTube channels provide short, in-
formative videos on various tax-related topics in English, Getting tax publications and instructions in eBook
Spanish, and ASL. format. You can also download and view popular tax
• Youtube.com/irsvideos. publications and instructions (including the Instructions for
Form 1040) on mobile devices as eBooks at IRS.gov/
• Youtube.com/irsvideosmultilingua. eBooks.
• Youtube.com/irsvideosASL.
Note. IRS eBooks have been tested using Apple's
Watching IRS videos. The IRS Video portal iBooks for iPad. Our eBooks haven’t been tested on other
(IRSVideos.gov) contains video and audio presentations dedicated eBook readers, and eBook functionality may
for individuals, small businesses, and tax professionals. not operate as intended.

Online tax information in other languages. You can Access your online account (individual taxpayers
find information on IRS.gov/MyLanguage if English isn’t only). Go to IRS.gov/Account to securely access infor-
your native language. mation about your federal tax account.
• View the amount you owe and a breakdown by tax
Free Over-the-Phone Interpreter (OPI) Service. The
year.
IRS is committed to serving our multilingual customers by
offering OPI services. The OPI Service is a federally fun- • See payment plan details or apply for a new payment
ded program and is available at Taxpayer Assistance plan.
Centers (TACs), other IRS offices, and every VITA/TCE • Make a payment or view 5 years of payment history
return site. The OPI Service is accessible in more than and any pending or scheduled payments.
350 languages.
• Access your tax records, including key data from your
Accessibility Helpline available for taxpayers with most recent tax return, and transcripts.
disabilities. Taxpayers who need information about ac- • View digital copies of select notices from the IRS.
cessibility services can call 833-690-0598. The Accessi-
bility Helpline can answer questions related to current and • Approve or reject authorization requests from tax pro-
future accessibility products and services available in al- fessionals.
ternative media formats (for example, braille, large print, • View your address on file or manage your communi-
audio, etc.). The Accessibility Helpline does not have ac- cation preferences.
cess to your IRS account. For help with tax law, refunds,
or account-related issues, go to IRS.gov/LetUsHelp. Tax Pro Account. This tool lets your tax professional
submit an authorization request to access your individual
taxpayer IRS online account. For more information, go to
IRS.gov/TaxProAccount.

Using direct deposit. The fastest way to receive a tax
refund is to file electronically and choose direct deposit,
which securely and electronically transfers your refund di-
rectly into your financial account. Direct deposit also
avoids the possibility that your check could be lost, stolen,
destroyed, or returned undeliverable to the IRS. Eight in

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10 taxpayers use direct deposit to receive their refunds. If • Electronic Funds Withdrawal: Schedule a payment
you don’t have a bank account, go to IRS.gov/ when filing your federal taxes using tax return prepara-
DirectDeposit for more information on where to find a tion software or through a tax professional.
bank or credit union that can open an account online.
• Electronic Federal Tax Payment System: Best option
Getting a transcript of your return. The quickest way for businesses. Enrollment is required.
to get a copy of your tax transcript is to go to IRS.gov/ • Check or Money Order: Mail your payment to the ad-
Transcripts. Click on either “Get Transcript Online” or “Get dress listed on the notice or instructions.
Transcript by Mail” to order a free copy of your transcript.
If you prefer, you can order your transcript by calling • Cash: You may be able to pay your taxes with cash at
a participating retail store.
800-908-9946.
• Same-Day Wire: You may be able to do same-day
Reporting and resolving your tax-related identity wire from your financial institution. Contact your finan-
theft issues. cial institution for availability, cost, and time frames.
• Tax-related identity theft happens when someone
Note. The IRS uses the latest encryption technology to
steals your personal information to commit tax fraud.
ensure that the electronic payments you make online, by
Your taxes can be affected if your SSN is used to file a
phone, or from a mobile device using the IRS2Go app are
fraudulent return or to claim a refund or credit.
safe and secure. Paying electronically is quick, easy, and
• The IRS doesn’t initiate contact with taxpayers by faster than mailing in a check or money order.
email, text messages (including shortened links), tele-
phone calls, or social media channels to request or What if I can’t pay now? Go to IRS.gov/Payments for
verify personal or financial information. This includes more information about your options.
requests for personal identification numbers (PINs), • Apply for an online payment agreement IRS.gov/ (
passwords, or similar information for credit cards, OPA) to meet your tax obligation in monthly install-
banks, or other financial accounts. ments if you can’t pay your taxes in full today. Once
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft you complete the online process, you will receive im-
Central webpage, for information on identity theft and mediate notification of whether your agreement has
data security protection for taxpayers, tax professio- been approved.
nals, and businesses. If your SSN has been lost or • Use the Offer in Compromise Pre-Qualifier to see if
stolen or you suspect you’re a victim of tax-related you can settle your tax debt for less than the full
identity theft, you can learn what steps you should amount you owe. For more information on the Offer in
take. Compromise program, go to IRS.gov/OIC.
• Get an Identity Protection PIN (IP PIN). IP PINs are
six-digit numbers assigned to taxpayers to help pre- Filing an amended return. Go to IRS.gov/Form1040X
vent the misuse of their SSNs on fraudulent federal in- for information and updates.
come tax returns. When you have an IP PIN, it pre-
Checking the status of your amended return. Go to
vents someone else from filing a tax return with your
IRS.gov/WMAR to track the status of Form 1040-X amen-
SSN. To learn more, go to IRS.gov/IPPIN.
ded returns.
Ways to check on the status of your refund.
Note. It can take up to 3 weeks from the date you filed
• Go to IRS.gov/Refunds. your amended return for it to show up in our system, and
processing it can take up to 16 weeks.
• Download the official IRS2Go app to your mobile de-
vice to check your refund status. Understanding an IRS notice or letter you’ve re-
• Call the automated refund hotline at 800-829-1954. ceived. Go to IRS.gov/Notices to find additional informa-
tion about responding to an IRS notice or letter.
Note. The IRS can’t issue refunds before mid-Febru-
ary for returns that claimed the EIC or the additional child Note. You can use Schedule LEP (Form 1040), Re-
tax credit (ACTC). This applies to the entire refund, not quest for Change in Language Preference, to state a pref-
just the portion associated with these credits. erence to receive notices, letters, or other written commu-
nications from the IRS in an alternative language. You
Making a tax payment. Go to IRS.gov/Payments for in- may not immediately receive written communications in
formation on how to make a payment using any of the fol- the requested language. The IRS’s commitment to LEP
lowing options. taxpayers is part of a multi-year timeline that is scheduled
• IRS Direct Pay: Pay your individual tax bill or estima- to begin providing translations in 2023. You will continue
ted tax payment directly from your checking or sav- to receive communications, including notices and letters
ings account at no cost to you. in English until they are translated to your preferred lan-
guage.
• Debit or Credit Card: Choose an approved payment
processor to pay online or by phone.

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Contacting your local IRS office. Keep in mind, many • You face (or your business is facing) an immediate
questions can be answered on IRS.gov without visiting an threat of adverse action; or
IRS TAC. Go to IRS.gov/LetUsHelp for the topics people
• You’ve tried repeatedly to contact the IRS but no one
ask about most. If you still need help, IRS TACs provide
has responded, or the IRS hasn’t responded by the
tax help when a tax issue can’t be handled online or by
date promised.
phone. All TACs now provide service by appointment, so
you’ll know in advance that you can get the service you
need without long wait times. Before you visit, go to How Can You Reach TAS?

IRS.gov/TACLocator to find the nearest TAC and to check TAS has offices in every state, the District of Columbia,
hours, available services, and appointment options. Or, and Puerto Rico. Your local advocate’s number is in your
on the IRS2Go app, under the Stay Connected tab, local directory and at TaxpayerAdvocate.IRS.gov/
choose the Contact Us option and click on “Local Offices.” Contact-Us. You can also call them at 877-777-4778.

The Taxpayer Advocate Service (TAS) How Else Does TAS Help Taxpayers?
Is Here To Help You
TAS works to resolve large-scale problems that affect
What Is TAS? many taxpayers. If you know of one of these broad issues,
report it to them at IRS.gov/SAMS.
TAS is an independent organization within the IRS that
helps taxpayers and protects taxpayer rights. Their job is
TAS for Tax Professionals
to ensure that every taxpayer is treated fairly and that you
know and understand your rights under the Taxpayer Bill TAS can provide a variety of information for tax professio-
of Rights. nals, including tax law updates and guidance, TAS pro-
grams, and ways to let TAS know about systemic prob-
How Can You Learn About Your Taxpayer lems you’ve seen in your practice.
Rights?
Low Income Taxpayer Clinics (LITCs)
The Taxpayer Bill of Rights describes 10 basic rights that
all taxpayers have when dealing with the IRS. Go to LITCs are independent from the IRS. LITCs represent in-
TaxpayerAdvocate.IRS.gov to help you understand what dividuals whose income is below a certain level and need
these rights mean to you and how they apply. These are to resolve tax problems with the IRS such as audits, ap-
your rights. Know them. Use them. peals, and tax collection disputes. In addition, LITCs can
provide information about taxpayer rights and responsibili-
What Can TAS Do for You? ties in different languages for individuals who speak Eng-
lish as a second language. Services are offered for free or
TAS can help you resolve problems that you can’t resolve a small fee for eligible taxpayers. To find an LITC near
with the IRS. And their service is free. If you qualify for you, go to TaxpayerAdvocate.IRS.gov/about-us/Low-
their assistance, you will be assigned to one advocate Income-Taxpayer-Clinics-LITC or see IRS Pub. 4134, Low
who will work with you throughout the process and will do Income Taxpayer Clinic List.
everything possible to resolve your issue. TAS can help
you if:
• Your problem is causing financial difficulty for you,
your family, or your business;

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Worksheet A. Simplified Method                                                   Keep for Your Records
1.  Enter the total pension or annuity payments received this year. Also, add this amount to the total for 
    Form 1040, 1040-SR, or 1040-NR, line 5a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1.   
2.  Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion.* 
    See Cost (Investment in the Contract) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 2.   
    Note: If your annuity starting date was before this year and you completed this worksheet last year, 
    skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the 
    amount of your pension or annuity has changed). Otherwise, go to line 3.
3.  Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 
    and the payments are for your life and that of your beneficiary, enter the appropriate number from 
    Table 2 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.   
4.  Divide line 2 by the number on line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               4.   
5.  Multiply line 4 by the number of months for which this year's payments were made. If your annuity 
    starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 
    Otherwise, go to line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     5.   
6.  Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on 
    line 10 of your worksheet for last year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               6.   
7.  Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       7.   
8.  Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           8.   
9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, 
    add this amount to the total for Form 1040, 1040-SR, or 1040-NR, line 5b. 
    Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line 
    instead. If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety 
    Officers before entering an amount on your tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           9.
10. Was your annuity starting date before 1987?
     Yes. STOP. Don’t complete the rest of this worksheet.
     No. Add lines 6 and 8. This is the amount you have recovered tax free through 2022. You will need 
    this number if you need to fill out this worksheet next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          10.  
11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you won’t have to complete 
    this worksheet next year. The payments you receive next year will generally be fully taxable . . . . . .                                                    11.
* A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996.

                                               Table 1 for Line 3 Above
                                                             AND your annuity starting date was—
               IF the age at annuity           BEFORE November 19, AFTER November 18,
               starting date was...            1996, enter on line 3... 1996, enter on line 3...
               55 or under                                   300              360
               56–60                                         260              310
               61–65                                         240              260
               66–70                                         170              210
               71 or older                                   120              160
                                               Table 2 for Line 3 Above
               IF the combined ages at                                        THEN enter
               annuity starting date were...                                  on line 3...
               110 or under                                                   410
               111–120                                                        360
               121–130                                                        310
               131–140                                                        260
               141 or older                                                   210

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                      To help us develop a more useful index, please let us know if you have ideas for index entries.
Index                 See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                          Disaster-related relief  40               Form RRB-1099-R    8
10% tax for early withdrawal    29        Distributions 27                          Form W-4P:
403(b) plans:                             (See also Rollovers)                       Withholding from retirement plan 
  Defined 5                                 Beginning date for  38                   payments    10
  Loans from, without tax                   Early distributions and penalty tax 29, Form W-4V:
  consequences       19                       33                                     Voluntary withholding request for social 
  Simplified Method to be used     13       Employer securities   16                 security or railroad retirement 
5% owners   38                              Loans treated as  19                     benefits    11
                                            Lump-sum   16 21 26, -                  Frozen deposits 30
A                                           Minimum required    37                  Fully taxable payments   12
Alimony (See Qualified domestic relations   Nonperiodic, taxation of 16
  orders (QDROs))                           Periodic, taxation of 12                G
Amending your return    44                  Public safety employees   36            General Rule 13 14, 
Annuities                                   Qualified reservist 36                   Death of retiree under 39
  5% rate on early distributions 33         U.S. savings bonds    18                 Investment in the contract, 
  Defined 4                               Dividends  16                              determination of   11
  Fixed-period  5 14,                                                               Guaranteed payments     13
  Guaranteed payments      40             E
  Joint and survivor annuities  5         Early withdrawal from deferred interest   H
  Minimum distributions from    39          account:                                Home purchase:
  Payments under    6                       Penalty tax on 29 33,                    Loans from qualified plans for       19
  Qualified plan annuity starting before  Eligible retirement plan  44
  November 19, 1996         13            Employer securities, distributions        I
  Rollovers 30                              of 16
                                                                                    In-plan Roth rollovers 31
  Single-life 5 14,                       Estate tax 23
                                                                                    Individual retirement accounts:
  Starting date of  11 13 16, ,             Deduction 39
                                                                                     Minimum distributions from  39
  Before November 19, 1996         16     Estimated tax 11
                                                                                     Rollovers 28
  Distribution on or after  17            Excess accumulation, tax on    37
                                                                                    Interest deduction:
  Transfers of contracts   20             Excess plan contributions, corrective 
  Types of 5                                distributions of 16                      Denial on loan from plan 20
  Variable annuities  5 6, 
Assistance (See Tax help)                 F                                         J
                                          Figuring taxable amount    16 18-         Joint and survivor annuities 5
B                                         Fixed-period annuities   5 14, 
Beneficiaries 39                          Foreign employment contributions      11  L
                                          Form:                                     Loans treated as distributions        19
C                                           4972 21                                 Local government employees:
Capital gains:                              W-4P 10                                  Section 457 plans  6
  Lump-sum distributions    23            Form 1040:                                Losses:
Cash withdrawals (See Nonperiodic           Rollovers 31                             Lump-sum distribution   23
  payments)                               Form 1040-X:                              Lump-sum distributions   16 21 26,    -
Child support (See Qualified domestic       Changing your mind on lump-sum           10-year tax option 23
  relations orders (QDROs))                   treatment 22                           Capital gain treatment  23
Coronavirus-Related Distributions     44  Form 1099-INT:                             Defined 21
Corrective distributions of excess plan     U.S. savings bonds distributions  18     Election of 22
  contributions  16                       Form 1099-R:                               Form 4972   21
Costs:                                      10-year tax option for lump-sum 
  Investment in the contract    11            distribution 23                       M
  Lump-sum distribution, determination      Corrected form 3                        Mandatory 60-day postponement           44
  for   23                                  Corrective distributions of excess plan Military and government disability 
                                              contributions  16                      pensions:
D                                           Exceptions to tax 35                     Service-connected disability        7
Death benefits  6                           Investment in the contract 11           Minimum required distributions         37
Death of employee    38 39,                 Loan treated as distribution from       Missing children, photographs of        3
Death of retiree 39                           plan  20
                                                                                    Multiple annuitants 14
Deductible voluntary employee               Rollovers 31
                                                                                    Multiple-lives annuities 14
  contributions  12                         Tax-free exchanges    21
Defined contribution plans      18        Form 4972:
                                                                                    N
Designated Roth accounts:                   10-year tax option for lump-sum 
  Costs 11                                    distribution 23                       Net Investment Income Tax    5 18, 
  Defined 4                                 Lump-sum distributions   21 22,         Net unrealized appreciation (NUA)        23
  Qualified distributions  12             Form 5329:                                 Deferring tax on 16
  Rollovers 31                              Recapture tax  37                       Nonperiodic payments:
Disability pensions   5 6,                  Special additional taxes (penalty        Loan treated as  19
                                              taxes)  33 35, 

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  Taxation of 16                              Rollovers 28                               Investment in the contract, 
Nonqualified plans:                         Qualified public safety employees      36    determination of     11
  Distribution before annuity start date 18 Qualified settlement income:                 Not allowed 14
  General Rule to be used  16                 Exxon Valdez litigation settlement   32    Single-sum in connection with start of 
  Loans treated as distributions from  20                                                payments     17
Nonresident aliens:                         R                                           Single-life annuities 5 14, 
                                                                                        Social security, tax on 11
  Railroad retirement 7                     Railroad retirement benefits   7 10-
                                                                                        State employees:
                                              Taxability of 11
                                                                                         Section 457 plans  6
P                                           Recapture tax:
                                                                                        State insurer delinquency 
Partial rollovers 29                          Changes in distribution method  37         proceedings     38
Partly taxable payments    12               Recontribution of Qualified                 Surviving spouse:
Penalty taxes:                                Distributions:
                                                                                         Distribution rules for 38
  Early distributions 33                      Purchase or Construction of a Main 
  Excess accumulation    37                   Home      42                               Rollovers by 30
Pensions:                                   Reemployment     21
  Defined 4                                 Related employers and related               T
  Disability pensions 5 6,                    plans 19                                  Tables:
  Types of 5                                Repayment of loan within 5 years       19    Comparison of direct payment vs. direct 
Periodic payments:                          Required beginning date  38                  rollover (Table 1)     32
  Taxation of 12                            Required distributions, minimum        37   Tax help 45
  Withholding tax 10                        Retirement bonds   30                       Tax-free exchanges    20
Plan loan offset  29                        Rollovers 28 32-                            Ten percent tax for early withdrawal  33
Public safety officers insurance              20% tax rate on distribution 11           Ten-year tax option   23
  premiums    7                               Comparison of direct payment vs. direct   Time for making rollover    29
Public school employees:                      rollover (Table 1) 32                     Transfers of annuity contracts   20
  Tax-sheltered annuity plans for             Direct rollover to another qualified 
  (See 403(b) plans)                          plan    11 29,                            U
Publications (See Tax help)                   In-plan Roth  31                          U.S. savings bonds:
                                              Nonspouse beneficiary  31                  Distribution of 18
Q                                             Nontaxable amounts  28
                                              Notice to recipients of eligible rollover V
Qualified disaster distributions  41          distribution   31
Qualified domestic relations orders           Property and cash distributed  30         Variable annuities 5
  (QDROs)   5 30,                             Roth IRAs 32                              Voluntary employee contributions      12
  Alternate payee under and lump-sum          Substitution of other property 30
  distribution   21                                                                     W
                                              Surviving spouse making 30
Qualified employee annuities:
                                                                                        Withdrawals 6
  Defined 4                                 S                                            Employees withdrawing 
  Simplified Method to be used  13                                                       contributions   18
Qualified employee plans:                   Section 457 deferred compensation 
  Defined 4                                   plans 6                                   Withholding 10
  Simplified Method to be used  13          Securities of employer, distributions        10% rate used   10
                                              of 16                                      20% of eligible rollover 28 29 32, , 
Qualified plans 16                          Self-employed persons' rollovers       28    Periodic payments    10
(See also specific type of plan)
  Distribution before annuity starting      Service-connected disability   7             Railroad retirement  7
  date    17                                Simplified Method  13                       Worksheets:
  General Rule  16                            Death of retiree under 40                  Simplified Method  14
  Loans from, without tax                     How to use 14                              Worksheet A, illustrated   15
  consequences        19                                                                 Worksheet A, Simplified Method    49

Publication 575 (2022)                                                                                                   Page 51

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