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Forward Averaging |
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Forward Averaging Treating lump-sum retirement-plan distributions as if they occurred over a five- or ten-year period. Forward averaging is available only to qualified plan participants who were born before 1936 and meet certain requirements. Notes: This treatment results in the distributions being taxed at a lower rate than the individual's ordinary tax rate.To be eligible for the capital gains and forward averaging treatment, qualified plan distributions must be in the form of a lump-sum distribution. Note: The five-year income averaging is repealed for taxable years beginning on or after January 1, 2000. Forward averaging A method of calculating taxes on a lump sum distribution from a qualified retirement plan that enables the tax payer to pay less than the current tax rate. |
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? Mentioned in | ? References in periodicals archive | |
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Javaughn Espiritt, a 6-5, 185-pound forward averaging 12. It can be reported using 10-year forward averaging if the client participated in the plan for at least five years. The tax code was amended to allow 10-year forward averaging of lump-sum payments. |
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