You should use that option if you are confident it applies to you and the plan participant (your deceased mother) qualifies. I am sorry for your loss.
TurboTax will walk you through the process.
Should I use Form 4972?
If you (the plan participant) were born before January 2, 1936, you may be able to use IRS Form 4972 to reduce the taxes on a lump-sum distribution. Assuming you qualify, the IRS allows you to elect one of five methods of taxation for lump-sum distributions:
- Report part of your withdrawal as a capital gain, with the remainder being ordinary income;
- Report part of your withdrawal as a capital gain, and use the 10-year tax option for the remainder;
- Use the 10-year tax option for the entire balance withdrawn;
- Roll over all or part of the distribution, and report any withdrawals as ordinary income; or
- Report the entire distribution as ordinary income.
The option that is best for you depends on your personal financial situation, but the benefit of Form 4972 is that you have tax options. Those who don't qualify for Form 4972 will have to use option #5 only.
Use the link to review more details about whether the lump sum method is allowed for your situation.
Yes, I did mean box 16, the state will tax it if applicable.
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