My 92 year old mother received a large gross distribution from a defined benefit cash balance plan in 2021 because she was deemed ineligible to continue accumulation in the plan because of IRT 415(b). Box 1 of her 1099r and Box 2 were the same amount. Box 7 had a code 7-normal distribution in it. She also receives a single life annuity at this time. Is she eligible to file Form 4972? I am trying to understand the difference between a gross distribution and a lump sum distribution in regards to filing Form 4972 or are they interchangeable? Thank you.
She should have received a formal Notice from the plan explaining the distribution, but my guess is that this is not qualified as a lump sum distribution and the total distribution box on the 1099R is not checked. Therefore, Form 4972 will not apply.
This might be a QEBA (qualified excess benefits arrangement) in which the excess amount above the 415b limit is distributed to the participant or participant’s survivor while the rest of the reduced benefit payments remain.
To be sure, she or a POA acceptable to the plan should ask for more info, but you might check whether she might have received a notice from the plan in the last few months about this distribution.