February 23, 2009
Income averaging strategy used to determine taxes on a lump-sum distribution as if the distribution occurred over a five-year period, resulting in a reduction of taxes that would otherwise be owed on the amount.
IRC § 402(d), Treas. Reg. §1.402(e)-2(d)
The Small Business Job Protection Act of 1996 eliminated the five-year averaging.
Applicable RMD Age The first year for which an IRA owner or plan participant must begin to take RMDs from their tax-deferred retirement account. RMDs
Definition A SIMPLE 401(k) plan is a 401(k) plan established by a small business for it’s employees. Earnings accrue on a tax-deferred basis and distributions
Definition The minimum amount that must be withdrawn from retirement accounts, including qualified plans, 403(b) accounts, 457(b) accounts or IRAs, each year. For retirement account
Definition The date by which a retirement account owner must begin distributing required minimum distribution (RMD) amounts from a Traditional, SEP or SIMPLE IRA, a
