- Line: 6
- Step: 5
- Step Subject: Tax, Non-refundable Credits & Checkoff Contributions
- Instruction Year: 2025
A lump-sum distribution occurs when, in one tax year, you receive the total balance from a pension or profit-sharing plan of an employer due to termination of employment, termination of the plan, or death of the employee.
Iowa lump-sum tax applies only if federal form 4972 was used to compute the federal tax on any portion of the lump-sum distribution. If there is no federal lump-sum tax, then there is no Iowa lump-sum tax.
Note: A lump-sum amount received from a governmental or other pension or retirement plan, including defined benefit or defined contribution plans, annuities, individual retirement accounts, plans maintained or contributed to by an employer, or maintained or contributed to by a self-employed person as an employer, and deferred compensation plans or any earnings attributable to a deferred compensation plan is not subject to Iowa lump-sum tax if the recipient is disabled, fifty-five years of age or older, or is the surviving spouse of an individual or is a survivor having an insurable interest in an individual who would have qualified.
Iowa Residents:
Enter 25% of the federal tax from federal form 4972 on the IA 1040, line 6. Include federal form 4972.
Part-Year Residents:
If a lump-sum distribution reported on federal form 4972 was received while an Iowa resident, 25% of the federal tax from form 4972 must be entered on IA 1040, line 6. Part-year residents who receive a lump-sum distribution while not an Iowa resident are not subject to Iowa lump-sum tax on that distribution. A copy of the federal form 4972 must be included.
Nonresidents:
Nonresidents receiving lump-sum distributions are not subject to Iowa lump-sum tax.
Married Separate Filers:
Lump-sum tax is reported by the spouse who received the distribution.
Go to Line 05: Iowa Tax
Go to Line 07: Total Tax