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did not permit “stretching” the retirement benefits and that
“your father’s entire interest in the plan will be paid to you
this year and you will be required to pay income tax on the full
amount of the distribution.”
On September 1, 2003, the sisters executed a “Lump Sum
Election Form” for the section 401(k) account, directing that the
entire benefit be paid to the trust and selecting the option for
lump-sum payment with 20-percent withholding for Federal income
tax.5
The Form 1041 filed by the trust does not reflect any tax
payments made by the trust, any estimated taxes paid by the
trust, any estimated tax payments allocated to the beneficiaries,
or any Federal income taxes withheld on payments received by the
trust.6
5 Although the distribution election form submitted in
evidence reflects a request for lump-sum distribution of the
retirement benefits with 20-percent withholding for Federal
income tax, petitioners have not produced any evidence, and the
record does not reflect, that any taxes were actually withheld
from the distribution made to the trust.
6 The “1099-R Detail Report - 2003” attached to the Form
1041 lists a single 1099-R, Distributions From Pensions,
Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance
Contracts, etc., with payor “Alliance Benefit Gro”. It reports
that code 4 was entered in box 7 (indicating payment on account
of death of the retirement plan participant), that the gross
distribution was $90,915, that the taxable amount was $90,915,
and that Alliance did not withhold any taxes from the
distribution.
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Last modified: March 27, 2008