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In his article on this site about lump sum withdrawals of retirement funds, Roy Lewis included this text:

"The 5-year forward-averaging rules were repealed by the Small Business Job Protection Act,effective for tax year 2000 (that is…1999 was potentially your last bite at the apple).However, all isn't lost yet... there are certain transitional rules that may still help you save some tax dollars."

I am looking to find more information about the "transitional rules" and the IRS publications aren't very helpful. Any suggestions would be very welcome.

Many thanks.
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<<In his article on this site about lump sum withdrawals of retirement funds, Roy Lewis included this text:

"The 5-year forward-averaging rules were repealed by the Small Business Job Protection Act,effective for tax year 2000 (that is…1999 was potentially your last bite at the apple).However, all isn't lost yet... there are certain transitional rules that may still help you save some tax dollars.">>

Right...looks like what I wrote, by cracky!!

<<I am looking to find more information about the "transitional rules" and the IRS publications aren't very helpful. Any suggestions would be very welcome.>>

Have you checked out IRS Pub 575? That provides the best information with respect to the lump sum rules, and should also mention the transitional rule.

But, very simply, the transitional rule permits participants (and their estates, trust, or beneficiaries) who were age 50 before January 1, 1986, to elect ten-year averaging even though the participant had not reached 59 1/2 years of age at that time. (Section 1122(h)(5), TRA 1986).

This transition rule continues, even though five-year averaging expires for tax years beginning after December 31, 1999. (Section 1401(c)(2), Small Business Job Protection Act of 1996.)

So, while this isn't much hope, it could provide some relief under limited circumstances.

Hope this helps...
TMF Taxes
Roy




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I suggest you also get a form 4972 and its instructions and ignore the part about 5 year averaging as that expired on 12/31/99. If you were born before 1936 you qualify for 10 year averaging and capital gains treatment. I don't think either publication refers to it as "transition rules". ed
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Hello Roy:

Thank you very much for the pointer about transitional rules - just what I needed and much appreciated.

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