Updated October 18, 2026. Quick answer: Form 4972 is the IRS form for figuring a separate tax on a qualified lump-sum distribution from an employer retirement plan. It has three parts: a yes or no test, a 20% capital gain election, and a 10-year tax option. The tax it produces is carried to Form 1040 line 16 or Form 1041 Schedule G, and this page maps the whole form and points to a page for each part.
What this form is for
The instructions open with the purpose: “Use Form 4972 to figure the tax on a qualified” lump-sum distribution, which the instructions go on to describe as one “you received in 2025 using the 20% capital gain election”, the 10-year tax option, or both. They describe the result this way: “These are special formulas used to figure a separate tax on the distribution that may result in a smaller tax than if you reported the taxable amount of the distribution as ordinary income.” They add that “You pay the tax only once, for the year you receive the distribution, not over the next 10 years.” “The separate tax is added to the regular tax figured on your other income.”
The form header limits who it is for: “From Qualified Plans of Participants Born Before January 2, 1936”. The instructions define a qualified lump-sum distribution: “It is the distribution or payment in 1 tax year of a plan participant’s entire balance from all of an employer’s qualified plans of one kind”, and they add “The participant must have been born before January 2, 1936.” For a beneficiary: “If you received a qualified distribution as a beneficiary after the participant’s death, the participant must have been born before January 2, 1936, for you to use this form for that distribution.”
The numbers on the form come from the payer’s statement: “The payer should have given you a Form 1099-R or other statement that shows the amounts needed to complete Form 4972.” For what each box means, see Form 1099-R boxes explained, and for the choice itself see pension and annuity decisions.
The parts of the form
| Part | Lines | What the form says |
|---|---|---|
| Part I | Lines 1 to 5 | “Complete this part to see if you can use Form 4972” Read it at Form 4972 Part I, lines 1 to 5. |
| Part II | Lines 6 and 7 | “Complete this part to choose the 20% capital gain elections” Read it at Form 4972 Part II, lines 6 and 7. |
| Part III, first half | Lines 8 to 17 | “Complete this part to choose the” 10-year tax option. These lines build the adjusted total taxable amount. Read them at Form 4972 lines 8 to 17. |
| Part III, second half | Lines 18 to 30 | These lines carry Part III through to the final line, which reads “Add lines 7 and 29.” Read them at Form 4972 lines 18 to 30. |
The form is attached to the return: “Attach to Form 1040, 1040-SR, 1040-NR, or 1041.” The final tax is entered on Form 1040 at Form 1040 line 16 (see also the Form 1040 line by line guide), or on Form 1041 Schedule G for an estate or trust. Estates are covered at Form 1041 for estates.
How to report the distribution
Part II is the 20% capital gain election: “If there is an amount in Form 1099-R, box 3, you can use Form 4972, Part II, to apply a 20% tax rate to the capital gain portion.” That amount is on Form 1099-R box 3. Part III is the 10-year tax option, and the instructions say it is available “whether or not you make the 20% capital gain election.”
The other boxes matter too. The ordinary income portion is described as “the amount from Form 1099-R, box 2a, minus the amount from box 3 of that form.” That is Form 1099-R box 2a less Form 1099-R box 3. The instructions also list “Box 6 (Net unrealized appreciation in employer’s securities).” (see Form 1099-R box 6 and employer stock in a 401(k)) and “Box 8 (Other). Current actuarial value of an annuity.” (see Form 1099-R box 8).
Which return line gets the amount depends on whether you use the form. If you use Part III, the instructions say “don’t include any part of the distribution on Form 1040, 1040-SR, or 1040-NR, lines 5a and 5b”. Without Form 4972, those are the lines described at Form 1040 lines 5a and 5b.
Distributions that don’t qualify
Under the heading “Distributions That Don’t Qualify for the 20% Capital Gain Election or the” 10-Year Tax Option, the instructions list many items. Six of them:
- “The part of a distribution not rolled over if the distribution is partially rolled over to another qualified plan or an IRA.”
- “U.S. Retirement Plan Bonds distributed with the lump sum.”
- “A distribution made during the first 5 tax years that the participant was in the plan, unless it was made because the participant died.”
- “A distribution to a 5% owner that is subject to penalties under section 72(m)(5)(A).”
- “A distribution from an IRA.”
- “A corrective distribution of excess deferrals, excess contributions, excess aggregate contributions, or excess annual additions.”
The list is longer than this, so read all of it in the instructions to your own form. The yes or no tests in Part I are covered at Form 4972 Part I, lines 1 to 5.
How often and when to file
On frequency: “After 1986, you can use Form 4972 only once for each plan participant.” For several participants, “File a separate Form 4972 for each participant’s distribution.”
On timing: “You can file Form 4972 with either an original or amended return.” “For an amended return, you must generally file within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later, to use any part of Form 4972.”
Numbers printed on Form 4972
| Where | What the IRS prints |
|---|---|
| Line 4, time in the plan | “a participant in the plan for at least 5 years before the year of the distribution” |
| Line 7, the 20% election | “Multiply line 6 by 20% (0.20)” |
| Line 12, the $70,000 test | “If this amount is $70,000 or more, skip lines 13 through 16” |
| Line 13, allowance cap | “Multiply line 12 by 50% (0.50), but don’t enter more than $10,000” |
| Line 14 | “Subtract $20,000 from line 12.” |
These are the line texts as printed. Each is worked through on the part pages linked above.
Edition
This page reads Form 4972 for 2025 and its instructions, the current file irs.gov served on 2026-10-18, for a distribution received in 2025. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Using the form for an IRA. The instructions list among the distributions that do not qualify: “A distribution from an IRA.”
- Using the form a second time for the same participant. The instructions say “After 1986, you can use Form 4972 only once for each plan participant.”
- Treating a partly rolled over distribution as fully eligible. The instructions list “The part of a distribution not rolled over if the distribution is partially rolled over to another qualified plan or an IRA.”
Related: Form 1040 line 16, Form 1099-R boxes explained, Form 1099-R box 3, Form 1099-R box 6, and pension and annuity decisions.
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Answer againSources
- Form 4972 (2025) with instructions, Tax on Lump-Sum Distributions: https://www.irs.gov/pub/irs-pdf/f4972.pdf
- IRS: About Form 4972: https://www.irs.gov/forms-pubs/about-form-4972
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.