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Essentially, you may qualify for ten-year averaging when you receive a lump-sum distribution (LSD) from a qualified plan. In effect, youre treated as if youre receiving the payout over ten years for tax purposes, thereby reducing the overall tax liability. How to take advantage of 10-Year Averaging in New Retirement Tax cpapracticeadvisor.com 2023/02/03 how cpapracticeadvisor.com 2023/02/03 how
Key Takeaways A lump-sum distribution is an amount of money due that is paid all at once, as opposed to being paid in regular installments. Lump-sum distributions may be made from retirement plans, commissions earned, windfall earnings, or certain fixed-income investments.
Essentially, you may qualify for ten-year averaging when you receive a lump-sum distribution (LSD) from a qualified plan. In effect, youre treated as if youre receiving the payout over ten years for tax purposes, thereby reducing the overall tax liability.
Increasingly, employers are making available to their employees a one-time payment for all or a portion of their pension. This is known as a lump-sum payout option. If you choose a lump-sum payout instead of monthly payments, the responsibility for managing the money shifts from your employer to you.
For all participants during 2022: The maximum permissible lump sum distributions from a Cash Balance/ Defined Benefit Plan is $3.151 million during 2022 (at age 62);

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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). Topic no. 412, Lump-sum distributions | Internal Revenue Service irs.gov taxtopics irs.gov taxtopics