Ohio Ohio Individual Income Tax Lump Sum Distribution Instructions

Ohio Individual Income Tax Lump Sum Distribution Instructions
pit_lumpsum
LS WKS
Rev. 1/18

10211411



Ohio Individual Income Tax Lump Sum Credit Instructions
Ohio Revised Code Sections 5747.05 and 5747.055
The following information explains how the lump sum retirement credit and the lump sum distribution credit are calculated
for recipients of a qualifying lump sum distribution. You may
be able to claim both credits for the same year.

Example A – Lump Sum Retirement Credit Calculation
A taxpayer retires in 2017 and is 59 years old at the end of
2017. The taxpayer receives a $60,000 lump sum retirement
distribution, all of which is included in their Ohio adjusted
gross income. The taxpayer’s lump sum retirement credit is
computed as follows:

Important: For tax years 2015 and later, both of these credits
are only available to taxpayers whose adjusted gross income
less exemptions (Ohio IT 1040, line 5) is less than $100,000.
Lump sum distribution defined (see Internal Revenue
Code [I.R.C.] section 402(e)(4)(D)) – A lump sum distribution is the payment of the employee’s entire balance from
either his/her employer’s qualified pension plan, his/her
employer’s qualified stock bonus plan or his/her employer’s
qualified profit-sharing plan. The balance need not be distributed in one payment but must be fully paid out within
one taxable year to the recipient in order for the distribution to qualify as a lump sum distribution. Furthermore, to
qualify as a lump sum distribution, the distribution must
have been made:
1.	because of the participant’s death; OR
2.	because of the participant’s separation from service (for
this purpose, a self-employed person is not considered
an employee); OR

$60,000 lump sum distribution
		
in
Ohio adjusted gross income
		
25 years remaining life
(Table 2 on page 3)

=

$2,400 (amount of
qualifying retirement
income)

For $2,400, $50 is the corresponding credit (Table 1 on
page 3).
Then, $50 x 25 years = $1,250 (lump sum retirement credit).
If the tax on line 1 of the Ohio Schedule of Credits is $800,
the taxpayer would compute the future annual retirement
credit as follows:
$	
1,250	
	
-800	
$	
450	
	 ÷ (25 - 1)	
$	

18.75	

lump sum retirement credit
tax due
unused amount
remaining life (years minus one)
future lump sum retirement credit (round to $19)

3.	after the participant (only if self-employed) becomes disabled as defined in I.R.C. section 72(m)(7).

No annual retirement credit can be claimed on a future
return to which the taxpayer is a party.

Note: Distributions from university retirement plans (see
I.R.C. section 403(b)) and from government deferred compensation plans (see I.R.C. section 457) do not qualify
for either the lump sum retirement credit or the lump sum
distribution credit because these plans are not described in
I.R.C. section 401(a).

II.	Lump Sum Distribution Credit
R.C. section 5747.055 (G)
This credit is taken in lieu of the $50 senior citizen credit.
To be eligible for the lump sum distribution credit, the recipient
of the qualifying lump sum distribution must be age 65 or older
in the year of receipt. It is not necessary for any portion of
the distribution to be included in Ohio adjusted gross income
to qualify for this credit.

I.	 Lump Sum Retirement Tax Credit
Ohio Revised Code (R.C.) sections 5747.055 (C), (D), (E)
This credit is taken in lieu of the annual retirement credit.

The credit is $50 times the recipient’s remaining life years
as determined from Table 2 on page 3. No senior citizen
credit can be claimed on a future return to which the
taxpayer is a party.

To be eligible for the lump sum retirement credit, the lump sum
distribution must have been received on account of retirement
and a portion of the distribution must be included in Ohio
adjusted gross income reported on the Ohio IT 1040, line 3.
If the entire distribution is rolled over into an Individual Retirement Account (IRA) or into another retirement plan trust,
no lump sum retirement credit is available. If a portion of the
distribution is rolled over, only the portion included in Ohio
adjusted gross income may be used to calculate the lump
sum retirement credit.
*The U.S. Sixth Circuit Court of Appeals, which has jurisdiction over Ohio,
has determined that actual separation of service may occur as a result of
an employer’s liquidation, merger or consolidation.

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Ohio Lump Sum Retirement/Distribution Credit Worksheet
Name:	

Year:	SSN:

This worksheet is for the Ohio lump sum credits found on the Ohio Schedule of Credits. Include both pages of this worksheet
with your Ohio IT 1040 and the Ohio Schedule of Credits if you are taking either of the Ohio lump sum credits. Also include
copies of all your 1099-R forms.
Section I – Income Test for Tax Years 2015 and Later
If you are completing this worksheet for a tax year prior to 2015, you may skip this question and start with Section II.
Yes	No

1.	Is your adjusted gross income less exemptions (Ohio IT 1040, line 5) less than $100,000?....................... 1. 	
If you answered “No” to the above question, STOP. You are not eligible for either of the Ohio lump sum credits. If you answered “Yes,” continue to Section II.
Section II – Determine If You Have a Qualified Lump Sum Distribution
1.	Was the lump sum distributed from a qualified employee benefit plan, such as a pension, profit-sharing,
	 stock bonus, Keogh, IRC 401(k), STRS, PERS, SERS?.............................................................................. 1.
2.	Was the distribution the employee’s entire balance in the account?............................................................. 2.
3.	Was the distribution paid within a single taxable year?................................................................................. 3.
4.	Was the distribution made because either (a) the employee died, quit, retired, was laid off, fired, or was
	 age 59.5 or older, or (b) the taxpayer was self-employed and became permanently and totally disabled?......4.

Yes	No
	

	

	

	



If you answered “No” to any of the four questions above, STOP. You are not eligible for either of the Ohio lump sum credits.
If you answered “Yes” to all four questions, you may be eligible for one or both of the Ohio lump sum credits. Please proceed
to Sections III and IV.
Section III – Determine Eligibility for and Calculate the Lump Sum Retirement Credit
Complete sections I and II before completing this section. This credit is for taxpayers who have received a qualified lump
sum distribution on account of retirement and have included a portion of it in the calculation of line 3 of the Ohio income tax
return, IT 1040. This credit is taken in lieu of the annual retirement credit that would be taken in the same tax year.
Yes	No

1.	Did you receive the lump sum distribution on account of retirement?........................................................... 1. 	
2.	Is all or some portion of the distribution included in your Ohio adjusted gross income on line 3 of the

	 Ohio IT 1040?............................................................................................................................................... 2. 	
If you answered “Yes” to both of the above questions, you are eligible for the lump sum retirement credit. Calculate the
credit as follows:
1.	Amount of retirement income (non-lump sum retirement income, if any, and lump sum
	 distribution(s) included in Ohio adjusted gross income on the Ohio IT 1040, line 3..............1. $
2.	Lump sum distribution recipient’s age at the end of the taxable year of the distribution........2.
3.	“Multiple” from Table 2 (page 3) based on the age entered on line 2.....................................3.
4.	Divide line 1 by line 3.............................................................................................................4. $
5.	Retirement income credit from Table 1 (page 3) based on the amount on line 4...................5. $
6.	Lump sum retirement credit (line 3 times line 5). Enter here and on the “lump sum
	 retirement credit” line on the Ohio Schedule of Credits.........................................................6. $
If the lump sum retirement credit exceeds the tax due, complete line 7; if not, stop here.
7.	Future retirement credit carryforward to subsequent taxable years
	 a)	Ohio tax due (line 1 on the Ohio Schedule of Credits)....................................................7a. $
	 b)	Unused amount (line 6 minus line 7a). If 0 or less, stop here..........................................7b. $
	 c)	Line 3 minus 1 year.........................................................................................................7c.
	 d)	Future annual retirement credit carryforward amount (line 7b divided by line 7c)...........7d. $
If the lump sum retirement credit is used in its entirety, no lump sum retirement income credit or annual retirement income
credit can be claimed on any future Ohio IT 1040 return to which the taxpayer is a party. Enclose both pages of this worksheet
and all of your 1099-R forms with your Ohio IT 1040.
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Ohio Lump Sum Retirement/Distribution Credit Worksheet
Section IV – Determine Eligibility for and Calculate the Lump Sum Distribution Credit
Complete sections I and II before completing this section. This credit is for taxpayers who have received a qualified lump sum
distribution and are age 65 or older in the current tax year. This credit is taken in lieu of the senior citizen credit that would
be taken in the same tax year. A taxpayer may qualify for the credit even if s/he does not report any portion of the lump sum
distribution in his/her Ohio adjusted gross income on line 3 of the Ohio IT 1040.
Yes	No

1.	Were you at least 65 years old by the end of the taxable year of the distribution?....................................... 1. 	
If you answered “Yes” to the above question, you are eligible for the lump sum distribution credit. Calculate the credit as follows:
1.	Lump sum distribution recipient’s age at the end of the taxable year of the distribution........1.
2.	“Multiple” from Table 2 (page 3) based on the age entered on line 1.....................................2.
3.	Lump sum distribution credit (line 2 times $50; cannot exceed $1,000). Enter here and
	 on the “lump sum distribution credit” line on the Ohio Schedule of Credits...........................3. $
If the lump sum distribution credit is used, no lump sum distribution credit or senior citizen credit can be claimed on any future
Ohio IT 1040 return to which the taxpayer is a party. However, claiming the lump sum distribution credit on the Ohio IT 1040
return does not make the taxpayer ineligible for the senior citizen credit available on the SD 100 return. Enclose both pages
of this worksheet and all of your 1099-R forms with your Ohio IT 1040.

Table 1 – Retirement Income Credit Table
Amount of qualifying retirement income
received and included in Ohio adjusted gross
income during the taxable year

Retirement income
credit for the
taxable year

	
$ 500 or less	
0
Over $ 500, but not more than $1,500	
$ 25
Over $1,500, but not more than $3,000	
$ 50
Over $3,000, but not more than $5,000	
$ 80
Over $5,000, but not more than $8,000	
$130
Over $8,000, but not more than $8,000 	$200

Table 2 – Unisex Table Ordinary Life Annuities One Life – Expected Return Multiples
(This life annuity table is to be used for distributions received on or after July 1, 1986.)

Age

Multiple

5	
76.6
6	
75.6
7	
74.7
8	
73.7
9	
72.7
10	71.7
11	70.7
12	69.7
13	68.8
14	67.8
15	66.8
16	65.8
17	64.8
18	63.9
19	62.9
20	61.9
21	60.9
22	59.9
23	59.0

Age

Multiple

24	58.0
25	57.0
26	56.0
27	55.1
28	54.1
29	53.1
30	52.2
31	51.2
32	50.2
33	49.3
34	48.3
35	47.3
36	46.4
37	45.4
38	44.4
39	43.5
40	42.5
41	41.5
42	40.6

Age

Multiple

43	39.6
44	38.7
45	37.7
46	36.8
47	35.9
48	34.9
49	34.0
50	33.1
51	32.2
52	31.3
53	30.4
54	29.5
55	28.6
56	27.7
57	26.8
58	25.9
59	25.0
60	24.2
61	23.3

Age

Multiple

62	22.5
63	21.6
64	20.8
65	20.0
66	19.2
67	18.4
68	17.6
69	16.8
70	16.0
71	15.3
72	14.6
73	13.9
74	13.2
75	12.5
76	11.9
77	11.2
78	10.6
79	10.0
80	9.5

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Age

Multiple

81	8.9
82	8.4
83	7.9
84	7.4
85	6.9
86	6.5
87	6.1
88	5.7
89	5.3
90	5.0
91	4.7
92	4.4
93	4.1
94	3.9
95	3.7
96	3.4
97	3.2
98	3.0
99	2.8

Age

Multiple

100	2.7
101	2.5
102	2.3
103	2.1
104	1.9
105	1.8
106	1.6
107	1.4
108	1.3
109	1.1
110	1.0
111	0.9
112	0.8
113	0.7
114	0.6
115	0.5