Message Font: Serif | Sans-Serif
No. of Recommendations: 0

I'm new here, so I don't want to stir up trouble, but do you mind educating
me on using multiple Form 4972's. After reading your post, I found that
most of the tax sources I have say that averaging is a one time only thing.
Can you direct me to specific information to the contrary, or past posts
where you addressed this? Since the averaging option goes away for those
born 1936 and after after this year, it might be important to know more
about this. Many thanks--John.

Hi John, welcome. You're not stirring up any trouble. I had heard that too, but there isn't any prohibition to filing multiple 4972s in the Code, nor any instructions, so those sources must be wrong. My post presumes how they might have made that mistake. My quote of the Code(s) show an intent to remove the "once in a lifetime" limitation (while still containing all the rules about combining trusts in plans of the same kind, etc). The context of the Code's "employee" (as to each plan he participates in) tracks with the instructions' "Plan Participant"---ie, "employee of a (that) plan" versus "participant of a (that) plan".

The instructions for Form 4972 lists 12 "Distributions that do not qualify ....." and don't mention a second distribution except #2 for the "same plan participant". It does not say the same "individual", "taxpayer", nor "person", but you would expect it to if that is what they intended. "How often can you choose" also says "only once for each plan participant", but NOT only once in a lifetime per taxpayer, and this is where you would expect such a didactic pronoucement.

The instructions for 4972 say "If you received more than one qualified distribution for the same plan participant, add them and figure the tax on the total amount. If you received qualified distributions for more than one participant, file a separate Form 4972 for the distributions of each participant." This tracks with other instructions to add trusts in the same "plans of the same kind" together, but not of different kinds. It also tells you it's O.K. to file multiple 4972s if there is more than one participant. Why doesn't it say if you received distributions from different plans you 1. must add them together?, or 2. you can't file a separate 4972 for each of them? or 3. you can file a 4972 for only one of them?

The "non-believers" would have you think this is only stated that way to accomodate filing as a beneficiary, however, that is taken care of in considerable detail elsewhere in the instructions.

They also quote the Form 4972 questions, particularly #5a which is a bit strange in that it doesn't define "your own plan". In context with #5b, however, it is apparant that this is a differentiation from being a beneficiary of a "plan participant" and therefor is also referring to THIS plan for which you are completing a Form 4972.

Oh, you say, #5a IS personal to "YOUR own plan", not your split personality of being more than one participant. Well, then, why didn't it prohibit filing another Form 4972 THIS year for ANOTHER distribution instead of just prohibiting a PREVIOUS distribution?
The reason is that Question #1 makes you combine all distributions for that plan this year, and the only thing that is prohibited is filing a 4972 this year when you filed one in a prior year for that same plan.

The question really is, "Why would the IRS mislead the taxpayer with these ambiguities if they intended something quite specific?" IS it an ambiguity or is it clearly thought out specific directions that exactly follow the intent of the Code? The only ambiguity is they neglect to tell you that you are actually multiple and different plan participants for each 4972 you complete.

Specifically, can an individual tapayer be more than one "Plan Participant" if he participated in more than one plan, or with more than one employer?

As a source yo might try CCH Tax Manager. After reading it you will realize how shallow the others are.

Hope this helps you and others with multiple plans.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.