4972-K - Kentucky Tax on Lump-Sum Distributions - Form 42A740 ... - imap taxhow-2025

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A lump sum allows you to collect all of your money at one time. On the other hand, an annuity is a series of steady payments that are made at equal intervals over time. These time periods could be weekly, monthly or annually. An annuity allows you to regularly collect part of your money over a pre-specified time frame.
If you were older than 59-1/2 before you received a lump sum from a qualified employee retirement plan, you may have some other options that can reduce your tax bill. To use any of these special treatments, you must complete IRS Form 4972, Tax on Lump-Sum Distributions, and attach it to your tax return.
If you take a lump-sum distribution, even using Form 4972, the retirement plan administrator typically withholds 20% of your withdrawal and sends it to the IRS on your behalf. If your ultimate tax liability is lower than 20%, you can claim that part back when you file your taxes.
Whats a lump-sum distribution? A lump-sum distribution is the distribution or payment within a single tax year of a plan participants entire balance from all of the employers qualified plans of one kind (for example, pension, profit-sharing, or stock bonus plans).
A lump sum tax rate is a tax that is the same value for all who pay the tax. Lump sum taxes do not take into consideration who is paying the tax nor how much is being produced. A lump sum tax will produce the same level of tax revenue regardless of Gross Domestic Product (GDP) output.
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A lump sum distribution is a one-time withdrawal from an annuity, pension, or retirement account. Depending on your circumstances, lump sum distributions may be subject to mandatary withholding or certain reporting requirements.
A lump-sum payment is an amount paid all at once, as opposed to an amount that is paid in installments. A lump-sum payment is not the best choice for everyone. For some, it may make more sense for the funds to be annuitized as periodic payments.
: an amount of money that is paid at one time : a single sum of money. The bonus is paid out in a lump sum.