Forward Averaging
Treating lump-sum retirement-plan distributions as if they occurred over a five- or ten-year period. Forward averaging is available only to qualified plan participants who were born before 1936 and meet certain requirements. Investopedia Says:
This treatment results in the distributions being taxed at a lower rate than the individual's ordinary tax rate.
To be eligible for the capital gains and forward averaging treatment, qualified plan distributions must be in the form of a lump-sum distribution.
Note: The five-year income averaging is repealed for taxable years beginning on or after January 1, 2000. Related Terms:
Active Participant Status
Capital Gains Treatment
Defined Benefit Pension Plan
Pension Plan
Qualified Distribution
Qualified Retirement Plan
Variable Death Benefit |