Submitted By: someone
Answered: March 24, 2017 8:38 am

I took a large distribution from my retirement plan. Can I income average to lower my tax bill?

Usually, a distribution from a qualified retirement plan is treated as ordinary income in the year in which it is received. However, for someone born before 1936, there is a special 10-year averaging rule. It only applies, however, to a lump-sum distribution. This is a distribution payable within a single tax year of a plan participant’s entire balance from all of the employer’s qualified plans of one kind (for example, pension, profit-sharing, or stock bonus plans).

Tax Glossary

Capital asset

Property subject to capital gain or loss treatment. Almost all assets you own are considered capital assets except for certain business assets or works you created.

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