A commission check or a pension plan distribution because of the pensioner's death are two examples of lump-sum distributions.
In general, distributions from qualified plans are treated as lump sum, if the following requirements are met:
1. The total plan balance is distributed over the same tax year.
2. The distribution is made as a result of the employee:
- attaining age 59.5
- being deceased (applicable to beneficiaries)
- separating from service (not applicable to self-employed individuals - but applies to their common-law employees) or
- being disabled (applicable only to self-employed individuals).
3. The distribution occurs after five years of participation (this requirements is waived for beneficiaries).
Investment dictionary. Academic. 2012.
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