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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3827
Experience:  20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Is there a way I can stop taxes from being taken from my

Customer Question

is there a way I can stop taxes from being taken from my lump-sum pension, without rolling it over into an IRA or other plan?
Submitted: 2 years ago.
Category: Tax
Customer: replied 2 years ago.
I just want to get my FULL lump-sum pension check, and to be able to pay the 20% federal taxes at a much later date.
Expert:  Barbara replied 2 years ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you today.

Employers of most pension plans are required to withhold a mandatory 20% of your lump sum retirement distribution when you leave their company. The 20% withheld from your lump sum retirement distribution is a federal income tax prepayment similar to the federal income taxes withheld from your pay check. It is held by the federal government as a credit toward your tax liability for the year in which your payout was made. You can use that tax prepayment to reduce your tax liability when you file your tax return the following year, usually by April 15th. Or, if you overpaid your federal taxes you will be entitled to a refund of the excess taxes withheld.

I apologize if this is not the answer you were hoping for.

Thank you and best regards,

Barb