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IRS.gov Website

Frequently Asked Tax Questions

Pensions/Annuities/Retirement Plans (i.e., 401(k), etc.) - Types of Plans

  1. I received a lump-sum distribution when I retired. Is there any special tax averaging option on a lump-sum distribution?
  2. If taxes are withheld from a distribution from a 401(k) plan, am I required to include the amount of the distribution as income and also pay the 10% additional tax?
  3. Can I withdraw my elective deferrals to a 401(k) plan to build or purchase my first home without paying the 10% additional tax on early distributions?
  4. I changed jobs and received a distribution (via check) of my entire vested account under my former employer's 401(k) plan. The plan withheld 20% of my account for Federal Income Taxes. Within 60 days of receiving the distribution, I rolled over the distribution to my current employer's 401(k) plan. Since taxes were withheld from the distribution made by my former employer's plan, do I have to include that money as income?
  5. If I retire or leave my employer for any reason (including due to being laid off) before I am age 59 1/2, can I withdraw my vested benefits under that employer's 401(k) plan, without having to pay a 10% additional tax? What if I were 55 or older when I separated from service with my employer?
  6. Where can I find additional information on various types of tax-favored retirement arrangements?

Rev. date: 9/16/2010

I received a lump-sum distribution when I retired. Is there any special tax averaging option on a lump-sum distribution?

A lump-sum distribution is the distribution or payment, within a single tax year, of an employee's entire balance from all of the employer's qualified pension, profit-sharing, or stock bonus plans. If you were born on or before January 1, 1936, or are the beneficiary of a participant born on or before January 1, 1936,  you may be able to able to elect optional methods of figuring the tax on lump-sum distributions you received from an eligible retirement plan.  These optional methods can be elected only once after 1986.
For other situations and further information, see Publication 575, Pension and Annuity Income.

Rev. date: 3/15/2011

If taxes are withheld from a distribution from a 401(k) plan, am I required to include the amount of the distribution as income and also pay the 10% additional tax?

 

Rev. date: 8/30/2010

Can I withdraw my elective deferrals to a 401(k) plan to build or purchase my first home without paying the 10% additional tax on early distributions?


Rev. date: 8/30/2010

I changed jobs and received a distribution (via check) of my entire vested account under my former employer's 401(k) plan. The plan withheld 20% of my account for Federal Income Taxes. Within 60 days of receiving the distribution, I rolled over the distribution to my current employer's 401(k) plan. Since taxes were withheld from the distribution made by my former employer's plan, do I have to include that money as income?

 
If the amount rolled over was the net amount (the amount of the distribution less the tax withheld):
If the amount rolled over was the gross amount (the amount rolled over included the 20% that was withheld):

Rev. date: 3/22/2011

If I retire or leave my employer for any reason (including due to being laid off) before I am age 59 1/2, can I withdraw my vested benefits under that employer's 401(k) plan, without having to pay a 10% additional tax? What if I were 55 or older when I separated from service with my employer?

.

Rev. date: 8/18/2010

Where can I find additional information on various types of tax-favored retirement arrangements?

The following IRS publications include additional information on retirement plans:
You may find additional information on the IRS’s website.
Additional Information
Types of Retirement Plans