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Aren't there tax savings for lump sum distributions?

Not to my knowledge, though I hardly claim to know all there is to know about this stuff. As MarleysGhost notes, "lump sum distributions" generally refers to withdrawing all of (or maybe just a large piece of) a retirement plan (like a 401K). If the funds are coming from such a plan, then you can typically roll them over into an IRA, and that's a large tax savings (or more properly, tax deferral). In the original post, it sounded like the sum was more of a golden-parachute kind of thing - the employer saying, "here's a big wad of cash, enjoy your retirement". So it's more like a bonus, and as far as I know, will be fully taxable as ordinary income to the recipient.

It's a shame the company won't be more accommodating - spreading the payment out over several years would help both the employee (less tax) and the employer (their cost is spread over several years).

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