Form 4972: Tax on a Lump-Sum Retirement Distribution
Published November 8, 2026
Form 4972 figures the tax on a lump-sum distribution from a qualified retirement plan. It offers two special methods: a 20% capital gain election and a 10-year tax option. The form is narrow. Most people who receive a distribution do not use it.
This post is general information from the 2025 Form 4972. It does not say whether a distribution can use the form, and it does not give tax advice for a particular case.
The first test: can you use the form?
Part I of the form asks a series of questions. Line 1 asks whether the distribution was the plan participant's entire balance from all of an employer's qualified plans of one kind, such as pension, profit-sharing, or stock bonus. If the answer is no, the form is not used.
Line 2 asks whether any part of the distribution was rolled over. If yes, the form is not used. Lines 3 and 4 ask about the participant's birth date and years in the plan. The form says that if the answers to lines 3 and 4 are both no, the form is not used.
The instructions say the participant must have been born before January 2, 1936, and must have been in the plan for at least 5 years before the year of the distribution. Lines 5a and 5b ask whether the form was used in an earlier year for the same plan.
Part II: the 20% capital gain election
Part II applies only to the capital gain part of the distribution. Line 6 uses box 3 of Form 1099-R. Line 7 multiplies that amount by 20%. If you use only Part II, the amount from line 7 goes on your Form 1040, line 16, and you check box 2 on that line.
Part III: the 10-year tax option
Part III applies the 10-year option. Line 8 starts from box 2a of Form 1099-R, minus box 3 if you completed Part II. Lines 9 through 11 handle the death benefit exclusion, the total taxable amount, and the current actuarial value of an annuity.
The form has a threshold on line 12. If the adjusted total taxable amount is $70,000 or more, the form says to skip lines 13 through 16. The rest of Part III uses a tax rate schedule from the instructions. Line 30 adds the tax from Part II and Part III.
Where the form goes
Form 4972 attaches to Form 1040, 1040-SR, 1040-NR, or Form 1041. The form says the total from line 30 goes on line 16 of the return.
What to gather first
- Form 1099-R, showing the gross distribution and the taxable amount.
- The plan's records of the participant's birth date and years of plan participation.
- Records of any earlier use of Form 4972 for the same plan.
For how a retirement distribution is reported in general, see Form 1099-R: What Retirement Distributions Mean on Your Return.
Why the first test matters
A distribution that fails any question in Part I cannot use this form, even if it looks like a lump sum. In that case, the form explains how to report the gross distribution and the taxable amount on the return instead. Compare the distribution against each question before you choose a method.
Choosing between the two options
The form lets you use Part II, Part III, or both. The 20% capital gain election applies only to the capital gain amount in box 3 of Form 1099-R. The 10-year option works from box 2a. Read the instructions before you choose, because the rules for each part are different.
Mistakes to avoid
- Using the form for a distribution that was partly rolled over.
- Leaving out the birth date or the years in the plan.
- Forgetting to check box 2 on Form 1040, line 16, when Part II is used.
Sources: Sources: IRS, Form 4972, Tax on Lump-Sum Distributions (2025, Rev. December 2025) (https://www.irs.gov/pub/irs-pdf/f4972.pdf) This is general information, not advice about your specific return.
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