ERISA Benefits Law Desk ReferenceERISA Benefits Tech, LLC

Part 6 · Chapter 2

Distributions, Rollovers, Withholding, and Spousal Annuities

Law stated as of October 3, 2026 · Distributions, Loans, Rollovers, and RMDs

Scope and status

This chapter covers the taxation of plan distributions, rollovers, and withholding, and the spousal annuity and consent rules. It touches required minimum distributions only where they meet the rollover rules; chapter 3 of this Part states the RMD rules in full. The current §402(f) model notice, Form 1099-R coding, and spousal-consent procedures should be confirmed before relying on them.

Citations are to primary authority (Code §§72, 402(c), 402(f), 402A, 401(a)(31), 3405, 401(a)(11), 417; the Treasury regulations under §§1.402(c)-2, 1.402(f)-1, 1.402A-, 1.401(a)(31)-1, 31.3405(c)-1, 1.401(a)-11/-20; and current IRS guidance). Distributable events and §72(p) loans are in chapter 1 of this Part, and §401(a)(9) is in chapter 3.

Sections

Part A is shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Taxation of Distributions

A1.The §72 baseline and investment in the contract (basis)

Part 6, ch. 2, § A1

A plan distribution is taxable under §72 except to the extent it represents the participant's investment in the contract (after-tax/basis), which is recovered tax-free under the §72 allocation rules (the pro-rata "cream-in-the-coffee" rule for partial distributions, with a separate-contract rule for certain after-tax accounts). Statute: Code §72; Final reg: Treas. Reg. §1.72-.

A2.Roth distributions and the 5-year rule

Part 6, ch. 2, § A2

A designated Roth account distribution is tax-free if it is a qualified distribution — made after a 5-taxable-year period (measured from the first year of a Roth contribution) and on or after age 59½, death, or disability. Statute: Code §402A(d); Final reg: Treas. Reg. §1.402A-1 (T.D. 9324). A non-qualified Roth distribution is taxed under §72 with separate Roth basis recovery. The 5-year clock for a Roth IRA is tracked separately from a designated Roth account, and a rollover carries special clock rules.

A3.Lump-sum distribution, NUA, and life insurance

Part 6, ch. 2, § A3

A lump-sum distribution of employer securities allows net unrealized appreciation (NUA) to be deferred and taxed as capital gain on later sale (only the cost basis is taxed at distribution). Statute: Code §402(e)(4). (Participants born before 1936 also keep ten-year averaging; now rarely relevant.) For distributed life insurance, the previously taxed cost of current protection (Table 2001 rates, which replaced the P.S. 58 rates) is basis. IRS Notice: Notice 2002-8.

Part B — The §72(t) 10% Additional Tax

  1. B1The early-distribution tax and its principal exceptionsSubscribers

Part C — Rollovers

  1. C1Eligible rollover distribution (ERD) — and what is NOT oneSubscribers
  2. C2Direct rollover, the 60-day rollover, and late-rollover self-certificationSubscribers
  3. C3After-tax allocation and Roth rolloversSubscribers

Part D — Withholding and Reporting

  1. D120% mandatory and 10% default withholdingSubscribers
  2. D2The §402(f) notice — current modelSubscribers
  3. D3Form 1099-RSubscribers

Part E — Cash-Out (Involuntary Distribution) Rules

  1. E1The mandatory cash-out and consent thresholdsSubscribers

Part F — Spousal Annuities (QJSA / QPSA) and Consent

  1. F1Which plans must provide survivor annuitiesSubscribers
  2. F2The QJSA, QPSA, and QOSASubscribers
  3. F3Waiver, spousal consent, and the written explanationSubscribers

Worked examples

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.

Sign inSubscribe