Save time with our cheat sheets, fact sheets, checklists & books!

February 23, 2009

Five-year Averaging

Your Guide

Print

Definition

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.

Referring Cite

IRC § 402(d), Treas. Reg. §1.402(e)-2(d)

Additional Helpful Information

The Small Business Job Protection Act of 1996 eliminated the five-year averaging.

More

Keep Learning

Domestic abuse distribution

A domestic abuse distribution is one that is made to domestic abuse victim, during the 1-year period beginning on any date on which the individual

Eligible retirement plan

The term “eligible retirement plan”, means a retirement plan to which a rollover contribution can be made. These are: (i)an individual retirement account described in

Qualified See-Through Trust beneficiary

Definition A qualified trust beneficiary is a trust that satisfies the requirements so as to be treated as a designated beneficiary.   For retirement accounts inherited

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

Be among the first to know when

IRA Rules
Change