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Form 4972: Tax on Lump-Sum Distributions
IRS Form 4972 is used to figure the tax on a qualified lump-sum distribution for individuals or estates/trusts. This form allows elections for a 20% capital gain rate or a 10-year tax option.
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IRS Form 4972 - Tax on Lump-Sum Distributions
IRS Form 4972 is used to figure the tax on a qualified lump-sum distribution for individuals or estates/trusts. This form allows elections for a 20% capital gain rate or a 10-year tax option.
Risk Radar
Scan points- 1Ensure you check box 2 on Form 1040/1040-SR/1040-NR line 16 when using Part II.
- 2Failing to check box 2 on Form 1040/1040-SR/1040-NR line 16 when using Part II.
- 3Not entering the correct amount from Form 1099-R, box 3 onto Form 4972, line 6 (Part II).
- 4Omitting any part of the distribution on lines 5a/5b if you use Part III only.
- 5Using Part II but failing to report only the ordinary income portion when using it without Part III.
Plain English
This form helps determine the correct tax when you receive a large, one-time payment (a lump-sum distribution). It lets you choose special ways to calculate this tax—either using a flat 20% capital gain rate or spreading the tax over ten years. This separate tax is added on top of your regular income tax for the year you get the money.
Submission Date
- Filing date: 2025-11-12 09:10:06
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when calculating tax on a qualified lump-sum distribution received in 2025, provided the participant was born before January 2, 1936.
- Do not use Form 4972 if the distribution is not of an entire balance from all of an employer’s qualified plans of one kind (unless exceptions apply).
- Check Form 1040 or Form 1040-SR instead when receiving a distribution as a plan participant who was born before January 2, 1936.
Form selector
Use this form or another form?
Spouse/former spouse receives distribution under QDRO
Use this form to figure the tax on the distribution using the 20% capital gain election or the 10-year tax option.
✓ Confirm Part II is used for the 20% rate.
Distribution is a corrective payment (e.g., excess deferrals)
Use this form to figure the tax on the distribution, as these are not qualified lump-sum distributions eligible for standard elections.
✓ Ensure the specific corrective type matches the rules in the instructions.
Using Part II but not Part III of Form 4972
Report only the ordinary income portion (Box 2a minus Box 3) on lines 5a and 5b, or Form 1041 line 8.
✓ Verify that the distribution is not reported as fully ordinary income elsewhere.
Using Part III of Form 4972
Do not include any part of the distribution on lines 5a and 5b of Form 1040, 1040-SR, or 1040-NR, or on Form 1041 line 8.
✓ Ensure all tax calculation is contained within Part III.
Distribution received as a beneficiary after 1986 and already used the form for a previous distribution from your own plan
Do not use this form if you previously used it in 1986 or later for a distribution from your own plan.
✓ Check Box 5a on Form 4972.
Deadline or filing window
The form is used for distributions received in 2025. If filing with Form 1040, 1040-SR, or 1040-NR, the total tax amount from Form 4972 must be included on line 16 of that return (checking box 2).
Checklist
What you need before filling it out
Qualified lump-sum distribution
Distribution from an employer’s qualified plans of one kind (e.g., pension, profit-sharing) · Form 4972, line 1
Distribution to a beneficiary
Must be paid to you as a beneficiary of a plan participant born before January 2, 1936 · Form 4972, lines 2 & 3
Tax Calculation (Line 25)
Multiply line 22 by 10% (0.10) · Form 4972, line 26/27
Reporting Tax Amount (Line 30)
Add lines 7 and 29 · Form 4972, line 30
Distribution Type Check
Was this a distribution of an entire balance? · Form 4972, line 1
Tax Rate Application
Use the Tax Rate Schedule in the instructions · Form 4972, line 27
Before you submit
- 1Verify that the distribution meets the criteria for a qualified lump-sum distribution from an employer’s qualified plans of one kind.
- 2Confirm that the recipient was born before January 2, 1936.
- 3Check Box 5a to confirm if Form 4972 has been used previously for this participant's own plan after 1986.
- 4If receiving as a beneficiary, check Box 5b to confirm if Form 4972 has been used previously for that participant's distribution after 1986.
- 5Calculate the tax on line 26 by multiplying line 22 by 0.10.
- 6Ensure Line 30 (Tax on lump-sum distribution) includes both lines 7 and 29.
- 7Confirm that the final amount from Line 30 is included in the total on Form 1040, 1040-SR, or 1040-NR, line 16 (check box 2).
How to file this form
- 1Complete Part I of IRS Form 4972 by filling in the recipient's name and identifying number.
- 2Determine if you can use Form 4972 based on questions 1 through 5a/b, ensuring all prerequisite conditions are met.
- 3Calculate the tax amount using lines 26 (Line 22 x 0.10), line 28 (Line 27 x 10.0), and finally Line 30 by adding Lines 7 and 29.
- 4Attach Form 4972 to the appropriate federal income tax return (Form 1040, 1040-SR, 1040-NR, or Form 1041) and include the final amount from Line 30 on line 16 of that form.
Known limitations
- 1The form applies to qualified lump-sum distributions from plans of participants born before January 2, 1936.
- 2If the distribution is not a participant’s entire balance (excluding deductible voluntary employee contributions and certain forfeited amounts) from all of an employer’s qualified plans of one kind, Form 4972 does not apply.
- 3If any part of the distribution was rolled over, Form 4972 does not apply.
- 4The capital gain election only qualifies for taxable amounts resulting from pre-1974 participation.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is 20/25, and users should go to www.irs.gov/Form4972 for the latest information regarding developments related to Form 4972.
What changed or needs a fresh check
- Edition date — confirm the revision reads 20/25.
- Form number — confirm the title is Tax on Lump-Sum Distributions (IRS Form 4972).
- Attachment requirement — confirm it attaches to Form 1040, 1040-SR, 1040-NR, or 1041.
- Use limit — confirm the form can be used only once for each plan participant after 1986.
Quick Facts
Downloads
After you file
- 1Keep a copy of the filed IRS Form 4972.
- 2If filing an amended return, generally file within 3 years after the original return was filed or within 2 years after the tax was paid, whichever is later.
- 3When using Part II, be sure to check box 2 on Form 1040, 1040-SR, or 1040-NR when reporting the amount from line 7 in total line 16.
- 4If completing both Part II and Part III, include the final tax amount (line 30) in the total on Form 1040, 1040-SR, or 1040-NR, line 16 (checking box 2), or Form 1041, Schedule G, line 1b.
Sources
- SRCForm 4972 is titled Tax on Lump-Sum Distributions (From Qualified Plans of Participants Born Before January 2, 1936) [Forms p.1]
- SRCThe form must be attached to Form 1040, 1040-SR, 1040-NR, or 1041 [Forms p.1]
- SRCPart I requires checking if the distribution was of a plan participant’s entire balance from all of an employer’s qualified plans of one kind [Form p.1]
- SRCThe deadline to file on an amended return is generally within 3 years after the original filing or within 2 years after tax payment, whichever is later [Forms p.3]
- SRCPart II calculates the capital gain election by multiplying line 6 (capital gain part from Form 1099-R, box 3) by 20% (0.20) [Form p.1]
- SRCThe tax on lump-sum distribution is calculated by adding lines 7 and 29 of Form 4972 [Forms p.1] — verify on the agency site
Common confusion points
Should I use Part II or Part III if my distribution has both capital gain and net unrealized appreciation (NUA)?
You can choose the 20% capital gain election in Part II, or you can choose the 10-year tax option in Part III. The instructions detail how to combine them.
→ Ensure you complete whichever parts are necessary based on your distribution details.
What amount goes into line 8 of Part III if I completed Part II?
Enter the amount from Form 1099-R, box 2a, minus the amount from Part II, line 7.
→ Confirm that this calculation (Box 2a - Line 7) is correct before proceeding.
What amount goes into line 8 of Part III if I did NOT complete Part II?
Enter the total amount directly from Form 1099-R, box 2a.
→ Check your Form 1099-R to confirm Box 2a matches this entry.
Where do I report the final tax on lump-sum distribution (line 30)?
Add line 7 and line 29 of Form 4972, then include this total in the total on Form 1040, 1040-SR, or 1040-NR, line 16 (checking box 2), or Form 1041, Schedule G, line 1b.
→ Verify that you checked Box 2 on the relevant form when reporting this amount.
What is the difference between the capital gain election and the 10-year tax option?
The 20% capital gain election (Part II) calculates a specific rate for the gain, while the 10-year tax option (Part III) uses different formulas based on your distribution type.
→ Review the instructions to see which method best suits the nature of your income.
When do I need to file Form 4972?
You can file it with an original return or an amended return.
→ Confirm that you are filing within the designated timeframes for either scenario.
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Questions about IRS Form 4972
What is IRS Form 4972 used for?
This form helps determine the correct tax when you receive a large, one-time payment (a lump-sum distribution). It lets you choose special ways to calculate this tax—either using a flat 20% capital gain rate or spreading the tax over ten years. This separate tax is added on top of your regular income tax for the year you get the money.
Who must file IRS Form 4972?
Individuals filing Form 1040, 1040-SR, or 1040-NR, and estates or trusts filing Form 1041 must use Form 4972 to figure the tax on a qualified lump-sum distribution.
What information does IRS Form 4972 require?
The form collects information regarding the distribution using Part II (for the 20% capital gain election) and Part III (for the 10-year tax option). It calculates amounts such as the taxable amount, the tax due from line 7 (Part II), and the final tax on the lump-sum distribution.
When is IRS Form 4972 due?
The form must be used for a qualified lump-sum distribution received in 2025. After 1986, an individual can use Form 4972 only once for each plan participant.
Where do I file IRS Form 4972?
The amounts calculated on Form 4972 are reported by attaching the form to Form 1040, 1040-SR, or 1040-NR (for individuals), or Form 1041 (for estates or trusts).
How do I complete IRS Form 4972?
First, determine if you should complete Part II (for the 20% capital gain election) or Part III (for the 10-year tax option). If using Part II, enter the amount from Form 1099-R, box 3 on line 6. Then, calculate the final tax by adding lines 7 and 29 to find the total tax on the lump-sum distribution.
What happens if IRS Form 4972 is filed incorrectly?
If you do not use Form 4972, but use Part II only, and fail to report the ordinary income portion correctly on lines 5a and 5b of your return, the tax calculation will be incorrect.
Should I use Part II or Part III if my distribution has both capital gain and net unrealized appreciation (NUA)?
You can choose the 20% capital gain election in Part II, or you can choose the 10-year tax option in Part III. The instructions detail how to combine them. Ensure you complete whichever parts are necessary based on your distribution details.
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