Can you illustrate this tax treatment in an example?
A participant, age 35, takes a $30,000 plan distribution in 2020:
Note: In Notice 2020-50 published on June 19, the IRS clarified that the default approach is to spread the tax liability ratably over three years, from 2020 to 2022. Individuals may elect to include the entire CRD amount on their 2020 tax return. However, once elected, the income inclusion method may not be changed.
Cetera Retirement Plan Specialists is a third-party administrator and may not offer tax, legal or investment advice. Plan sponsors should consult their own tax, legal or investment professionals.