Hawaii Tax on Lump-Sum Distributions

Tax on Lump-Sum Distributions
Instructions for Form N-152 Rev 2022
Clear Form
INSTRUCTIONS
		
FORM N-152
		
(Rev. 2023)

		
	

	

		
		

STATE OF HAWAII — DEPARTMENT OF TAXATION

INSTRUCTIONS FOR FORM N-152

TAX ON LUMP-SUM DISTRIBUTIONS
From Qualified Retirement Plans
(Section references are to the Internal Revenue Code.)
(Note: Reference to “spouse” is also a reference to “civil union partner.”)

Note: Any lump-sum distribution representing a pension for past services should
not be included in the amount reportable
for Hawaii income tax purposes. Complete Schedule J (Form N-11/N-15/N-40)
to determine the taxable portion of your
lump-sum distribution. See the instructions for Part I, line 2 for more information.

Important

•	The 5-year tax option is no longer
available. The capital gain election
and the 1
­ 0-year tax option are still
available to those who were born
before 1936.
•	The $5,000 exclusion for employerprovided death benefits has been
repealed for plan participants dying
after August 20, 1996. If you received
death benefits from an employer as a
beneficiary of a participant who died
after August 20, 1996, you cannot
take this death benefit exclusion.

Nonresidents and Part-Year
Residents
Public Law 104-95 prohibits any state
from imposing an income tax on the retirement income of any individual who is
not a resident or domiciliary of that state.
As a result, nonresidents and part-year
residents who received their lump-sum
distribution while they were a nonresident
do not need to complete Form N-152.
However, they must complete Schedule
J (Form N-11/N-15/N-40) to determine
the amount to include on Form N-15, line
16, Column A.

General Instructions
Purpose of Form

If you received a lump-sum distribution
from a qualified profit-sharing or retirement plan, all or part of the distribution
may be taxable. You can use Form N-152
to figure your tax by special methods. The
capital gain election and the 10-year tax
option are special formulas used to figure
a separate tax on a qualified lump-sum
distribution ONLY for the year in which
the distribution is received.
You pay the tax only once. You do not
pay the tax over the next 10 years. Once
you choose your option and figure the
tax, it is then added to the regular tax figured on your other income.

Who Can Use the Form
You can use Form N-152 if you received
a qualified lump-sum distribution in 2023.
To see if your distribution is a qualified
lump-sum distribution, see the following
discussion.
What is a Qualified Lump-Sum Distribution?
It is the distribution or payment in one tax
year of a plan participant’s entire balance
from all of the employer’s qualified plans
of one kind (i.e., pension, profit-sharing,
or stock bonus plans), in which the participant had funds. The participant’s entire
balance does not include deductible voluntary employee contributions or certain
forfeited amounts. The participant must
have been born before 1936.
Distributions upon death of the plan
participant. If you received a qualifying
distribution as a beneficiary after the participant’s death, the participant must have
been born before 1936 for you to use this
form for that distribution.
Distributions to Alternate Payees.—If
you are the spouse or former spouse of
a plan participant who was born before
1936 and you received a qualifying lumpsum distribution as an alternate payee
under a qualified domestic relations order, you can use Form N-152 to figure the
tax on that distribution.
You can use Form N-152 to make the
capital gain election and use the 10-year
tax option to figure your tax on the distribution.
See How To Report The Distribution
on this page.
Distributions That Do Not Qualify for
the Capital Gain Election or for the
10-Year Tax Option
The following distributions are not qualifying lump-sum distributions and do not
qualify for the capital gain election or the
10-year tax option:
1.	 The part of a distribution not rolled
over if the distribution is partially rolled
over to another qualified plan or an
IRA.
2.	 Any distribution if an earlier election
to use either the 5- or 10-year tax option had been made after 1986 for the
same plan participant.

3.	 U.S. Retirement Plan Bonds distributed with the lump-sum.
4.	 Any distribution made before the participant had been in the plan for 5 tax
years, unless it was paid because
the participant died.
5.	 The current actuarial value of any annuity contract included in the lumpsum (the payor’s statement should
show this amount, which you use only
to figure tax on the ordinary income
part of the distribution).
6.	 Any distribution to a 5% owner that is
subject to federal penalties under section 72(m)(5)(A).
7.	 A distribution from an IRA.
8.	 A distribution of the redemption proceeds of bonds rolled over tax free to
a qualified pension plan, etc., from a
qualified bond purchase plan.
9.	 A distribution from a qualified plan if
the participant or his or her surviving spouse previously received an
eligible roll over distribution from the
same plan (or another plan of the employer required to be combined with
that plan for the lump-sum distribution
rules), and the previous distribution
was rolled over tax free to another
qualified plan or an IRA.
10.	A corrective distribution of excess deferrals, excess contributions, excess
aggregate contributions, or excess
annual additions.
11.	A distribution from a qualified plan that
received a rollover after 2001 from an
IRA (other than a conduit IRA), a governmental section 457 plan, or a section 403(b) tax-sheltered annuity on
behalf of the plan participant.
12.	A distribution from a qualified plan that
received a rollover after 2001 from another qualified plan on behalf of that
plan participant’s surviving spouse.
13.	A distribution from a qualified pension
or annuity plan if any portion of the
distribution is rolled over tax free to
another qualified pension or annuity
plan or IRA.
14.	A distribution from a tax-sheltered annuity (section 403(b) plan).

FORM N-152 INSTRUCTIONS
(REV. 2023)	

How To Report the Distribution
If you qualify to use Form N-152 attach
it to Form N-11, N-15, or N-40 (estates
or trusts). The payor should have given
you a federal Form 1099-R, Distributions
From Pensions, Annuities, Retirement or
Profit–Sharing Plans, IRAs, Insurance
Contracts, etc., or other statement that
shows the amounts to use in completing
the form. The following choices are available to you:
1.	 Capital Gain Election. If the plan
participant was born before 1936, and
there is an amount shown on Form
1099-R, Box 3 (capital gain), you can
use Part II of this form to make the
capital gain election. When you complete Part II, you are electing to report
the capital gain portion as a long-term
capital gain. See Capital Gain Election on this page and Part II, line 9,
instructions on page 3 for details.
2.	 10-Year Tax Option. If the plan participant was born before 1936, you
can use Part III to figure your tax on
the lump-sum distribution. You can
use this option whether or not you
make the capital gain election described on this page.
Where to Report. — Depending on
which parts of Form N-152 you choose
to use, report amounts from your 1099R either directly on your tax return (Form
N-15 or Form N-40) or on Form N-152.
(Note: Form N-11 filers, see Instructions
for Form N-11 Filers on this page).
•	If you choose not to use any part
of Form N-152, report the taxable
portion of the distribution from
Schedule J (Form N-11/N-15/N-40),
line 22 on Form N-15, line 16,
Column A; or Form N-40, line 8.
•	If you choose not to use Part III of
Form N-152, but you do use Part II to
make the capital gain election, report
only the taxable ordinary income
part of the distribution on Form
N-15, line 16, Column A; or on Form
N-40, line 8. The taxable ordinary
income portion of the distribution
is determined by subtracting the
taxable capital gain portion from the
total taxable distribution.
•	If you choose to use Part III of Form
N-152, do not include on Form
N-15, line 16, Column A; or on Form
N-40, line 8, the taxable ordinary
income amount you use in the tax
computation on this form.
In addition, if you make the capital gain
election (Form N-152, Part II), do not include the capital gain amount from Form

	

1099-R, Box 3, or from Form N-152, line
11, on Form N-15, line 16, Column A; or
Form N-40, line 8.
The entries in other boxes on Form
1099-R may also apply in completing
Form N-152:
•	Box 6, Net Unrealized Appreciation
(NUA). See page 3 for details on
how to treat this amount.
•	Box 8, other, current actuarial value
of an annuity.
If applicable, get the amount of federal
estate tax paid attributable to the taxable
part of the lump-sum distribution from the
administrator of the deceased’s estate.
For more details, see federal Publication 575.
Instructions for Form N-11 Filers
•	If you choose not to use any part of
Form N-152, complete Schedule J
(Form N-11/N-15/N-40) through line
24.
•	If you choose not to use Part III of
Form N-152, but you do use Part
II to make the capital gain election,
enter the taxable ordinary income
portion on line B of the Form N-11
Filers Worksheet on page 4. The
taxable ordinary income portion
of the distribution is determined
by subtracting the taxable capital
gain portion from the total taxable
distribution.
•	If you choose to use Part III of Form
N-152, do not enter the taxable
ordinary income amount you use in
the tax computation on this form on
the Form N-11 Filers Worksheet.
•	If you make the capital gain election
(Form N-152, Part II), enter the
capital gain amount from Form
N-152, line 11, on line A of the Form
N-11 Filers Worksheet.

How Often You Can Use Form
N-152

After 1986, you may use Form N-152
only once for each plan participant. If
you receive more than one lump-sum distribution for the same plan participant in
one tax year, you must treat all those distributions the same way. Combine them
on a single Form N-152.
If you make an election as a beneficiary
of a deceased participant, it does not affect any election you can make for qualifying lump-sum distributions from your
own plan. You can also make an election as the beneficiary for more than one
qualifying person.
Example:  Your mother and father died
and each was born before 1936. Each

Page  2

had a qualifying plan for which you are
the beneficiary. You also received a qualifying lump-sum distribution from your
own plan and you were born before 1936.
You may make an election for each of the
distributions; one for yourself, one as the
beneficiary of your father, and one as
the beneficiary of your mother. It does
not matter if the distributions all occur in
the same year or in different years. File
a separate Form N-152 for each participant’s distribution(s).
Note: An election on Form N-152, or
Form N-162 for distributions received
before 1987, while you were under age
59-1/2, does not preclude any election
you can make for distributions received
after 1986.

When You Can File Form N-152
You can file Form N-152 with either an
original or an amended return. For an
amended return, you generally must file
within 3 years after the date the original
return was filed or within 2 years after the
date the tax was paid, whichever is later,
to use any part of Form N-152.

Capital Gain Election
If the plan participant was born before
1936 and the distribution includes a capital gain, you can either (1) make the capital gain election in Part II, or (2) treat the
capital gain as ordinary income.
Only the taxable amount of distributions resulting from pre-1974 participation
qualifies for capital gain treatment. The
capital gain amount should be shown
on Form 1099-R, Box 3 (capital gain). If
there is an amount on Form 1099-R, Box
6 (net unrealized appreciation), part of
it may also qualify for capital gain treatment. Use the NUA Worksheet on page
3 to figure the taxable capital gain part of
NUA if you make the election to include
NUA in your taxable income.
You may report the ordinary income
portion of the distribution on Form N-15,
line 16, Column A; or Form N-40, line 8;
or you may elect to figure the tax using
the 10-year tax option. The ordinary income portion is the amount from Form
1099-R, Box 2a, minus the amount from
Box 3 of that form.
Net Unrealized Appreciation (NUA). —
Normally, NUA in employer securities received as part of a lump-sum distribution
is not taxable until the securities are sold.
However, you can elect to include NUA in
taxable income in the year received.
The total amount to report as NUA
should be shown in Form 1099-R, Box
6. Part of the amount in Box 6 will qualify
for capital gain treatment if there is an

FORM N-152 INSTRUCTIONS
(REV. 2023)	

amount in Form 1099-R, Box 3, and you
elect to include the NUA in current income.
To figure the total taxable amount subject to capital gain treatment including the
NUA, complete the NUA Worksheet on
page 3.
See the Specific Instructions for more
information on line entries.

Specific Instructions

Name of Recipient of Distribution
and Identifying Number. — At the top of
Form N-152, fill in the name and identifying number of the recipient of the distribution.
If you received more than one qualifying
distribution in 2023 for the same plan participant, add them and figure the tax on
the total amount. If you received qualified
distributions in 2023 for more than one
participant, file a separate Form N-152 for
the distributions of each participant.
If you and your spouse are filing a joint
return and each has received a lump-sum
distribution, complete and file a separate
Form N-152 for each spouse’s election,
and combine the tax on Form N-11, line
27; or Form N-15, line 44.
If you are filing for a trust that shared the
distribution only with other trusts, figure
the tax on the total lump-sum first. The
trusts then share the tax in the same proportion that they shared the distribution.
If the distribution is made to more than
one beneficiary, follow the instructions
under Multiple Recipients of a LumpSum Distribution on page 4.

Part I

Line 2.— Income received as a pension for past services is not subject to
Hawaii income tax. Only that portion of a
retirement or profit-sharing plan that is received because of your retirement or the
death of the employee and is paid for by
the employer is considered a pension for
this purpose. If you did not contribute to
the cost of the plan, i.e., your employer
paid the entire cost, check “Yes” on line
2. No part of the distribution is subject to
Hawaii income tax. Do not complete the
rest of the form. If you paid part of the cost
of the plan and your employer paid part of
the cost, that portion considered to have
been paid by your employer is a pension.
The portion that you are considered to
have paid is not a pension and is subject
to Hawaii income tax. If you paid part of
the cost of your plan, check “No” on line
2. You will need to complete Schedule J
(Form N-11/N-15/N-40) to determine the
taxable portion of your distribution.

	

Complete Schedule J (Form N-11/N15/N-40) If you qualify to use this form,
you will need to complete Schedule J
to determine the taxable portion of your
distribution. If you elect to include NUA
in taxable income, include the amount
from Box 6 of federal Form 1099-R in the
amount on Schedule J (Form N-11/N15/N-40), line 1.

Part II

See Capital Gain Election on page 2
before completing Part II.
Line 9. — Leave this line blank if your
distribution does not include a capital gain
amount, or you do not make the capital
gain election. Go to Part III.
To make the capital gain election, enter
on line 9 the entire capital gain amount
from Form 1099-R, Box 3. However, if
you elect to include NUA in your taxable
income, enter on line 9 the amount from
line G of the NUA Worksheet on this page
instead of the amount from Form 1099R, Box 3. On the dotted line to the left of
the entry space for line 9, write “NUA” and
the amount from line E of the NUA Worksheet.
To make the capital gain election when
you are taking a death benefit exclu-

Page  3

sion (for a participant who died before
August 21, 1996), figure the amount to
enter on line 11 using the Death Benefit
Worksheet on this page.
The remaining allowable death benefit
exclusion should be entered on line 16 if
you choose the 10-year tax option.
If any federal estate tax was paid on
the lump-sum distribution, you must
decrease the capital gain amount by the
amount of estate tax applicable to it. To
figure the amount, multiply the total federal estate tax paid on the lump-sum distribution by the decimal amount from line
E of the Death Benefit Worksheet. The
result is the portion of the federal estate
tax applicable to the capital gain amount.
Subtract that amount from the capital
gain amount from line H of the Death
Benefit Worksheet, and enter the result
on line 11. If you elected to include NUA
in taxable income, subtract the portion of
federal estate tax applicable to the capital
gain amount from the amount on line G of
the NUA Worksheet. Enter the result on
line 11. Enter the remainder of the federal
estate tax on line 26.
Note: If you take the death benefit exclusion AND federal estate tax was paid on
the capital gain amount, the capital gain

NUA Worksheet (keep for your records)
Do not complete if you do not make a capital gain election
A.	 Enter the amount from Form 1099-R, Box 3................................... A. 	
B.	 Enter the amount from Form 1099-R, Box 2a................................. B.	
C.	 Divide line A by line B and enter the result as a decimal (rounded
to at least three places)................................................................... C. 	
D.	 Enter the amount from Form 1099-R, Box 6................................... D. 	
E.	 Multiply line C by line D and enter the result (NUA subject to
capital gain treatment)..................................................................... E. 	
F.	 Subtract line E from line D (NUA that is ordinary income)............... F. 	
G.	 Add lines A and E (total part of distribution that can receive capital
gain treatment). Enter the total here and on Form N-152, Part II,
line 9................................................................................................ G. 	
On the dotted line next to line 9, write “NUA” and the amount from
line E above.

Death Benefit Worksheet (keep for your records)
A.	 Enter the capital gain amount from Form 1099-R, Box 3. If you
elected to include NUA in taxable income, enter the amount from
line G of the NUA Worksheet.......................................................... A. 	
B.	 Enter the factor from Schedule J, line 16........................................ B. 	
C.	 Multiply line A  by line B................................................................... C. 	
D.	 Enter the amount from Schedule J, line 20..................................... D. 	
E.	 Divide line C by line D and enter the result as a decimal (rounded
to at least three places)................................................................... E. 	
F.	 Enter your share of the death benefit exclusion*............................. F. 	
G.	 Multiply line F by line E.................................................................... G. 	
H.	 Subtract line G from line C. Enter the result here and on Form
N-152, Part II, line 11. Write “DBE” in the amount space for line 9..H. 	
* Applies only for participants who died before August 21, 1996. If there are multiple recipients
of the distribution, the $5,000 maximum death benefit exclusion must be allocated among the
recipients in the same proportion that they share the distribution.

FORM N-152 INSTRUCTIONS
(REV. 2023)	

	

amount must be reduced by both procedures discussed above to figure the correct entry for line 11.
Line 11. — Multiply the amount on line 9
by the factor on line 10. Enter this amount
here. Form N-11 filers, enter this amount
on the Form N-11 Filers Worksheet, line
A, on page 4.
Lines 12a through 12k. — Before completing lines 12a through 12k, complete
Part III, lines 14 through 17, even if you
do not elect to use Part III.

Part III

Line 14.— Enter the amount from Schedule J (Form N-11/N-15/N-40), line 20. If
you have elected to include NUA in your
taxable income, write “NUA” on the dotted line to the left of line 14.
Line 15.— If you made the capital gain
election, subtract line 11 from line 14.
Line 16. — If you received the distribution
because of the plan participant’s death,
and the participant died before August
21, 1996, you may be able to exclude
up to $5,000 of the lump-sum from your
gross income. If you are filing for a trust
and the trust shared the lump-sum with
other trusts, it will share the exclusion
in the same proportion as it shared the
distribution. This exclusion applies to the
beneficiaries or estates of common-law
employees, self-employed individuals,
and shareholder-employees who owned
more than 2% of the stock of an S corporation. Federal Publication 939 gives
more information about the death benefit
exclusion.

Enter the death benefit exclusion on
line 16. But see the instructions for line 9,
if you made a capital gain election.
Line 26. — A beneficiary who receives a
lump-sum distribution because of a plan
participant’s death must reduce the taxable part of the distribution by any federal
estate tax paid on the lump-sum distribution. The reduction is made by entering
on line 26 the federal estate tax attributable to the lump-sum distribution. Also,
see the instructions for line 9 if you made
a capital gain election.
Part III, Lines 32 and 35. — Use the
TAX RATE SCHEDULE FOR 10-YEAR
TAX OPTION, which is printed on page 2
of Form N-152 to complete lines 32 and
35.
Multiple Recipients of a Lump-Sum
Distribution. — If you shared a lumpsum distribution from a qualified retirement plan when not all recipients were
trusts (a percentage will be shown in
Boxes 8 and/or 9a, Form 1099-R), figure
your tax on Form N-152 as follows:
Step 1. — Complete Parts I and II of
Form N-152.
Step 2. — Use this step only if you do
not elect to include NUA in your taxable
income or if you do not have NUA. If you
elect to include NUA in taxable income,
skip Step 2 and go to Step 3. (Box numbers used below are all from Form 1099R)
(a)	If you do not make the capital gain
election, divide the amount shown on
Schedule J (Form N-11/N-15/N-40),
line 20 by your percentage of distri-

Page  4

bution shown in Box 9a. Enter this
amount on Form N-152, line 14.
(b)	If you make the capital gain election,
subtract the amount on line 11 from
the amount on Schedule J (Form N11/N-15/N-40), line 20. Divide the result by your percentage of distribution
shown in Box 9a. Enter the result on
Form N-152, line 14.
(c)	Divide the amount shown in Box 8 by
the percentage shown in Box 8. Enter the result on Form N-152, line 18.
Step 3. — Use this step only if you
elect to include NUA in your taxable income. (Box numbers used below are all
from Form 1099-R.)
(a)	If you do not make the capital gain
election, add the amount on Schedule J (Form N-11/N-15/N-40), line 20
to the amount shown in Box 6. Divide
the result by your percentage of distribution shown in Box 9a. Enter the
result on Form N-152, line 14.
(b)	If you make the capital gain election,
subtract the amount on line 11 from
the amount on Schedule J (Form
N-11/N-15/N-40), line 20. Add to the
result the amount from line F of your
NUA Worksheet. Then divide the total by your percentage of distribution
shown in Box 9a. Enter the result on
Form N-152, line 14.
(c)	Divide the amount shown in Box 8 by
the percentage shown in Box 8. Enter the result on Form N-152, line 18.
Step 4. — Complete Form N-152, Part
III, through line 36.
Step 5. — Complete the Multiple Recipient Distribution Worksheet below
to figure the entry for line 37.

Form N-11 Filers Worksheet (keep for your records)
A.	
B.	
C.	
D.	

Enter the amount from Form N-152, line 11.................................... A. 	
Enter the taxable ordinary income portion of the distribution.......... B. 	
Add lines A and B............................................................................ C. 	
Enter the sum of the amounts, if any, from federal Form 1040,
lines 4b and 5b, which are attributable to any taxable income
which could have been reported on federal Form 4972.................. D. 	
E.	 Compare lines C and D. If line C is larger than line D, enter the
Hawaii Additional Taxable amount (line C minus line D) here and
on your Hawaii Additions Worksheet, line j, on page 31 of the
Form N-11 Instructions.................................................................... E. 	
F.	 Compare lines C and D. If line C is smaller than line D, enter the
Hawaii Nontaxable amount (line D minus line C) here and on your
Hawaii Subtractions Worksheet, line n, on page 31 of the
Form N-11 Instructions.................................................................... F. 	

Multiple Recipient Worksheet (keep for your records)
A.	 Enter your percentage of distribution from Form 1099-R, Box 9a... A. 	
B.	 Form N-152, line 33 minus line 36.................................................. B. 	
C.	 Multiply line A by the amount on line B. Enter the amount here
and on Form N-152, line 37. Also, write “MRD” on the dotted line
next to the entry space. This amount is in place of the amounts
originally obtained by completing Step 4......................................... C.