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.
Definition A distribution that is excludable from the distributee’s income, as a result of meeting the following requirements: It is made after the distributee reaches
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
Who is an active participant? Active participant status affects an individual’s eligibility to take a deduction for a contribution to a traditional IRA on his/her
Definition An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the
