Form 4972????

[SueBaby]

I have never used a form 4972 didn't need or have to; but on a client that had over $35,000 in annuity the form printed out.

My question; was I suspose to put something on that form for him? He had his annuity on a 1099 statement of annuity paid.

I find nothing on it in the tax book; or I might have overlooked it.
Any info on this would be greatly appreciated as always with something new for me.
THANKS

[erchess]

PDF of Form and Instructions

http://www.irs.gov/pub/irs-pdf/f4972.pdf

This should enable you to check out the job your software did. I found it through the search feature at the IRS website.

If he took a complete distribution from a tax deferred annuity I would think that the form would be appropriate and that if you correctly key in the F1099R your software may very well take care of the rest.

[taxea]

how old is he? did he leave the company? was this a total distribution? what is the code on the 1099?
It is seldom a good idea to rely on the software if you don't understand the law. What software are you using?

[S T]

Form 4972

SueBaby, it has been ages since I have used this form, so really had to look up some of the information

If you go to the IRS Website http://www.irs.gov/taxtopics/tc412.html it will give you I think the info you need.

If you receive a lump-sum distribution from a qualified retirement plan or a qualified retirement annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. These optional methods can be elected only once after 1986 for any eligible plan participant.

If you just answer the Part I questions, that will give you a clue as to whether or not you need to move forward to completing the form.

Sandy

[SueBaby]

how old is he? did he leave the company? was this a total distribution? what is the code on the 1099?
It is seldom a good idea to rely on the software if you don't understand the law. What software are you using?

Both husband and wife have one and the code is 7 they were born in the 50s. They did leave their jobs and retire. I use Drake and the paper work printed out was 0 on current actuarial value of annuity from Form 1099-R box 8?

It looks like I have to read up on the info about this form and fill in the blanks.
Thanks to all to help me with this matter again.

[Snaggletooth]

Method of Choice

Prior to the 1986 code, the 4972 was the method of choice for persons receiving a lump sum cashout of a retirement plan. It gave the recipient a choice of paying on 10% of the amount, and then annualizing over 10 years, and this was almost always infinitely cheaper than electing taxation of the entire amount.

They did away with this in 1986, but grandfathered those people who were 50 years old at the time. This means it may be used today for people 73 and over.

Like Sandy, I haven't used it in years.

[SueBaby]

Prior to the 1986 code, the 4972 was the method of choice for persons receiving a lump sum cashout of a retirement plan. It gave the recipient a choice of paying on 10% of the amount, and then annualizing over 10 years, and this was almost always infinitely cheaper than electing taxation of the entire amount.

They did away with this in 1986, but grandfathered those people who were 50 years old at the time. This means it may be used today for people 73 and over.

Like Sandy, I haven't used it in years.

Oh great I have something that noone has used! Thanks anyway

[dyne]

I consider it RARE indeed for a taxpayer to wait until he is 73 years of age to withdraw
a lump sum distribution but it IS possible.

[taxmom34]

i used it myself in 1998 and paid the one time tax on total distribution

[joanmcq]

If they were born in the 50's they don't qualify for the tax treatment. Must be born before 1936.