J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

7.4 Averaging on Form 4972

If you were born before January 2, 1936, and the other averaging tests (7.2) are satisfied, you may elect on Form 4972 to compute the tax on a lump-sum distribution received using a 10-year averaging method based on 1986 tax rates for single persons.

If you were born after January 1, 1936, you may not elect averaging for a lump-sum distribution of your account balance. However, you may elect averaging as the beneficiary of a deceased plan participant who was born before January 2, 1936 (7.6).

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Caution

Averaging Not Allowed for Those Born After January 1, 1936

If you were born after January 1, 1936, a lump-sum distribution from your plan is not eligible for averaging.

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Averaging on 2012 returns.

If you qualify for averaging (7.2), follow IRS instructions to Form 4972 for applying the 10-year averaging method. If you received more than one qualified lump sum, you may elect averaging for one of the distributions only if you elect averaging for all.

The amount eligible for averaging is the taxable portion of the distribution shown in Box 2a of Form 1099-R. You may also elect to add to the Box 2a amount any net unrealized appreciation in employer securities (shown in Box 6) included in the lump sum. If you are receiving the distribution as a beneficiary of a plan participant who died before August 21, 1996, follow ...