VolvoGirl, I think your guess is a reasonable one, that $150,000 was first rolled over to a traditional IRA ($150,000 of nontaxable income) and subsequently a $50,000 distribution was made from the traditional IRA ($50,000 of taxable income). The total of nontaxable and taxable income is therefore $200,000. Only the $50,000 of taxable income has any effect on the rest of the tax return. Had the $50,000 cash been distributed directly from the pension plan, a minimum of 20% ($10,000 ) would have been required to have been withheld for taxes, so rolling everything over to the traditional IRA first avoids that mandatory 20% withholding.
