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I have a unique situation and need help
03-02-2012, 03:29 PM
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#1
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Confused about dryer sheets
Join Date: Mar 2012
Posts: 4
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I have a unique situation and need help
Last year my employer sold my group to another company at the same time I was offered an early retirement package. I was able to accept the early retirement package as well as move to the new company with no change in pay. Long story short, I ended up with a very large income for last year and now have to deal with this on my taxes. Most of the lump sum distribution was subject to withholding so my taxes are mostly covered, but some of the items included in the early retirement settlement (Medical insurance lump sum payment) were not. The taxes from the parts of the settlement not subject to withholding along with the AMT results in a fairly large tax liability for me. Does anyone know of any rules or regulations that can be taken advantage of in this unique situation? Any help would be appreciated.
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03-02-2012, 03:55 PM
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#2
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Recycles dryer sheets
Join Date: Jan 2011
Location: Desert SW
Posts: 346
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None that I am aware of. If the dollars are large, go see a tax accountant.
__________________
Retired in 2011 at 54
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03-02-2012, 04:07 PM
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#3
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Confused about dryer sheets
Join Date: Mar 2012
Posts: 4
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that is my plan, I was just trying to educate myself before hand.
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03-02-2012, 04:08 PM
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#4
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 16,887
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Since you say taxes were withheld, I take it an IRA rollover wasn't an option and that the distribution was more than 60 days ago? Ouch! You may have a painful tax bite, best of luck. You've probably already read this then Tax Topics - Topic 412 Lump–Sum Distributions. I don't know anything about the situation, but I see cap gains and a lump sum 10 year tax option that you may want to explore.
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 30% bond funds / 20% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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03-02-2012, 04:13 PM
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#5
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Confused about dryer sheets
Join Date: Mar 2012
Posts: 4
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I have read that publication but I am not old enough to take advantage of that treatment. Thanks for the suggestion. The settlement shows up as a termination payment on the W2 and was not eligible for rollover into another retirement vehicle. I probably dont have many options, but I will be talking with a tax accountant on Monday to see if they have any suggestions.
Thanks again
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03-02-2012, 04:14 PM
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#6
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2005
Posts: 15,648
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 Quote:
Originally Posted by Midpack
Since you say taxes were withheld, I take it an IRA rollover wasn't an option and that the distribution was more than 60 days ago? Ouch! You may have a painful tax bite, best of luck. You've probably already read this then Tax Topics - Topic 412 Lump–Sum Distributions |
I don't think the OP was talking about a distribution from his 401... but a severence payment... but who knows for sure...
But, if it is what I think it is, severence.... then you are out of luck... high income = high taxes....
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03-02-2012, 04:17 PM
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#7
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 16,887
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Quote:
Originally Posted by Texas Proud
I don't think the OP was talking about a distribution from his 401... but a severence payment... but who knows for sure...
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You can also rollover a lump sum retirement distribution, it's not just for 401k's. His first post didn't say termination (it said early retirement package & lump sum distribution), but I see his second did. I also doubt termination/severance pay can be rolled over...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 30% bond funds / 20% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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03-02-2012, 04:18 PM
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#8
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Confused about dryer sheets
Join Date: Mar 2012
Posts: 4
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I suspect you are correct. At least it is not the worst problem in the world to have 
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