N-152 Instructions — Tax on Lump-Sum Distributions

INSTRUCTIONS
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STATE OF HAWAII - DEPARTMENT OF TAXATION

# INSTRUCTIONS FOR FORM N-152

TAX ON LUMP-SUM DISTRIBUTIONS

From Qualified Retirement Plans
(Section references are to the Internal Revenue Code.)
(Note: Reference to "spouse" is also a reference to "civil union partner.")

1. U.S. Retirement Plan Bonds distrib-Note: Any lump-sum distribution representing a pension for past services should not be included in the amount reportable

# Who Can Use the Form

You can use Form N-152 if you received uted with the lump-sum.

1. Any distribution made before the parfor Hawaii income tax purposes. Complete Schedule J (Form N-11/N-15/N-40) to determine the taxable portion of your lump-sum distribution. See the instruca qualified lump-sum distribution in 2024.

To see if your distribution is a qualified lump-sum distribution, see the following discussion. ticipant had been in the plan for 5 tax years, unless it was paid because the participant died.

1. The current actuarial value of any antions for Part I, line 2 for more information.

# Important

• The 5-year tax option is no longer available. The capital gain election and the 10-year tax option are still available to those who were born What is a Qualified Lump-Sum Distribution?

It is the distribution or payment in one tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (i.e., pension, profit-sharing, nuity contract included in the lumpsum (the payor's statement should show this amount, which you use only to figure tax on the ordinary income part of the distribution).

1. Any distribution to a 5% owner that is before 1936.
2. The $5,000 exclusion for employerprovided death benefits has been or stock bonus plans), in which the participant had funds. The participant's entire balance does not include deductible voluntary employee contributions or certain subject to federal penalties under section 72(m)(5)(A).
3. A distribution from an IRA. repealed for plan participants dying after August 20, 1996. If you received forfeited amounts. The participant must
4. A distribution of the redemption prodeath benefits from an employer as a beneficiary of a participant who died after August 20, 1996, you cannot take this death benefit exclusion. have been born before 1936.

Distributions upon death of the plan participant. If you received a qualifying distribution as a beneficiary after the parceeds of bonds rolled over tax free to a qualified pension plan, etc., from a qualified bond purchase plan.

1. A distribution from a qualified plan if

# Residents

Public Law 104-95 prohibits any state from imposing an income tax on the retirement income of any individual who is not a resident or domiciliary of that state.
As a result, nonresidents and part-year residents who received their lump-sum distribution while they were a nonresident ticipant's death, the participant must have been born before 1936 for you to use this form for that distribution.
Distributions to Alternate Payees.-If you are the spouse or former spouse of a plan participant who was born before 1936 and you received a qualifying lumpsum distribution as an alternate payee under a qualified domestic relations order, you can use Form N-152 to figure the the participant or his or her surviving spouse previously received an eligible roll over distribution from the same plan (or another plan of the employer required to be combined with that plan for the lump-sum distribution rules), and the previous distribution was rolled over tax free to another qualified plan or an IRA.

1. A corrective distribution of excess dedo not need to complete Form N-152.

However, they must complete Schedule J (Form N-11/N-15/N-40) to determine the amount to include on Form N-15, line tax on that distribution.
You can use Form N-152 to make the capital gain election and use the 10-year tax option to figure your tax on the distriferrals, excess contributions, excess aggregate contributions, or excess annual additions.

1. A distribution from a qualified plan that 16, Column A.

# Purpose of Form

If you received a lump-sum distribution from a qualified profit-sharing or retirebution.
See How To Report The Distribution on this page.
Distributions That Do Not Qualify for the Capital Gain Election or for the 10-Year Tax Option received a rollover after 2001 from an IRA (other than a conduit IRA), a governmental section 457 plan, or a section 403(b) tax-sheltered annuity on behalf of the plan participant.

1. A distribution from a qualified plan that ment plan, all or part of the distribution may be taxable. You can use Form N-152 to figure your tax by special methods. The capital gain election and the 10-year tax The following distributions are not qualifying lump-sum distributions and do not qualify for the capital gain election or the 10-year tax option: received a rollover after 2001 from another qualified plan on behalf of that plan participant's surviving spouse.
2. A distribution from a qualified pension option are special formulas used to figure a separate tax on a qualified lump-sum distribution ONLY for the year in which the distribution is received.

You pay the tax only once. You do not

1. The part of a distribution not rolled over if the distribution is partially rolled over to another qualified plan or an IRA.
2. Any distribution if an earlier election or annuity plan if any portion of the distribution is rolled over tax free to another qualified pension or annuity plan or IRA.
3. A distribution from a tax-sheltered anpay the tax over the next 10 years. Once you choose your option and figure the tax, it is then added to the regular tax figured on your other income. to use either the 5- or 10-year tax option had been made after 1986 for the same plan participant. nuity (section 403(b) plan).

# How To Report the Distribution

If you qualify to use Form N-152 attach it to Form N-11, N-15, or N-40 (estates or trusts). The payor should have given you a federal Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., or other statement that shows the amounts to use in completing the form. The following choices are available to you:

1. Capital Gain Election. If the plan participant was born before 1936, and there is an amount shown on Form 1099-R, Box 3 (capital gain), you can use Part II of this form to make the capital gain election. When you complete Part II, you are electing to report the capital gain portion as a long-term capital gain. See Capital Gain Election on this page and Part II, line 9, instructions on page 3 for details.
2. 10-Year Tax Option. If the plan participant was born before 1936, you can use Part III to figure your tax on the lump-sum distribution. You can use this option whether or not you make the capital gain election described on this page.

Where to Report. - Depending on which parts of Form N-152 you choose to use, report amounts from your 1099-R either directly on your tax return (Form N-15 or Form N-40) or on Form N-152.
(Note: Form N-11 filers, see Instructions for Form N-11 Filers on this page).

• If you choose not to use any part of Form N-152, report the taxable portion of the distribution from Schedule J (Form N-11/N-15/N-40), line 22 on Form N-15, line 16, Column A; or Form N-40, line 8.
• If you choose not to use Part III of Form N-152, but you do use Part II to make the capital gain election, report only the taxable ordinary income part of the distribution on Form N-15, line 16, Column A; or on Form N-40, line 8. The taxable ordinary income portion of the distribution is determined by subtracting the taxable capital gain portion from the total taxable distribution.
• If you choose to use Part III of Form N-152, do not include on Form N-15, line 16, Column A; or on Form N-40, line 8, the taxable ordinary income amount you use in the tax computation on this form.

In addition, if you make the capital gain election (Form N-152, Part II), do not include the capital gain amount from Form 1099-R, Box 3, or from Form N-152, line 11, on Form N-15, line 16, Column A; or Form N-40, line 8.
The entries in other boxes on Form 1099-R may also apply in completing Form N-152:

• Box 6, Net Unrealized Appreciation (NUA). See page 3 for details on how to treat this amount.
• Box 8, other, current actuarial value of an annuity.

If applicable, get the amount of federal estate tax paid attributable to the taxable part of the lump-sum distribution from the administrator of the deceased's estate.
For more details, see federal Publication 575.
Instructions for Form N-11 Filers

• If you choose not to use any part of Form N-152, complete Schedule J (Form N-11/N-15/N-40) through line 24.
• If you choose not to use Part III of Form N-152, but you do use Part II to make the capital gain election, enter the taxable ordinary income portion on line B of the Form N-11 Filers Worksheet on page 4. The taxable ordinary income portion of the distribution is determined by subtracting the taxable capital gain portion from the total taxable distribution.
• If you choose to use Part III of Form N-152, do not enter the taxable ordinary income amount you use in the tax computation on this form on the Form N-11 Filers Worksheet.
• If you make the capital gain election (Form N-152, Part II), enter the capital gain amount from Form N-152, line 11, on line A of the Form

N-11 Filers Worksheet.

# How Often You Can Use Form

After 1986, you may use Form N-152 only once for each plan participant. If you receive more than one lump-sum distribution for the same plan participant in one tax year, you must treat all those distributions the same way. Combine them on a single Form N-152.
If you make an election as a beneficiary of a deceased participant, it does not affect any election you can make for qualifying lump-sum distributions from your own plan. You can also make an election as the beneficiary for more than one qualifying person.
Example:  Your mother and father died and each was born before 1936. Each had a qualifying plan for which you are the beneficiary. You also received a qualifying lump-sum distribution from your own plan and you were born before 1936.
You may make an election for each of the distributions; one for yourself, one as the beneficiary of your father, and one as the beneficiary of your mother. It does not matter if the distributions all occur in the same year or in different years. File a separate Form N-152 for each participant's distribution(s).
Note: An election on Form N-152, or Form N-162 for distributions received before 1987, while you were under age

59-1/2, does not preclude any election you can make for distributions received after 1986.

# When You Can File Form N-152

You can file Form N-152 with either an original or an amended return. For an amended return, you generally must file within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later, to use any part of Form N-152.

# Capital Gain Election

If the plan participant was born before 1936 and the distribution includes a capital gain, you can either (1) make the capital gain election in Part II, or (2) treat the capital gain as ordinary income.
Only the taxable amount of distributions resulting from pre-1974 participation qualifies for capital gain treatment. The capital gain amount should be shown on Form 1099-R, Box 3 (capital gain). If there is an amount on Form 1099-R, Box 6 (net unrealized appreciation), part of it may also qualify for capital gain treatment. Use the NUA Worksheet on page 3 to figure the taxable capital gain part of NUA if you make the election to include NUA in your taxable income.
You may report the ordinary income portion of the distribution on Form N-15, line 16, Column A; or Form N-40, line 8; or you may elect to figure the tax using the 10-year tax option. The ordinary income portion is the amount from Form 1099-R, Box 2a, minus the amount from Box 3 of that form.
Net Unrealized Appreciation (NUA). -Normally, NUA in employer securities received as part of a lump-sum distribution is not taxable until the securities are sold.
However, you can elect to include NUA in taxable income in the year received.
The total amount to report as NUA should be shown in Form 1099-R, Box

1. Part of the amount in Box 6 will qualify for capital gain treatment if there is an amount in Form 1099-R, Box 3, and you elect to include the NUA in current income.

To figure the total taxable amount subject to capital gain treatment including the NUA, complete the NUA Worksheet on page 3.
See the Specific Instructions for more information on line entries.

# Specific Instructions

Name of Recipient of Distribution and Identifying Number. - At the top of Form N-152, fill in the name and identifying number of the recipient of the distribution.
If you received more than one qualifying distribution in 2024 for the same plan participant, add them and figure the tax on the total amount. If you received qualified distributions in 2024 for more than one participant, file a separate Form N-152 for the distributions of each participant.
If you and your spouse are filing a joint return and each has received a lump-sum distribution, complete and file a separate Form N-152 for each spouse's election, and combine the tax on Form N-11, line 27; or Form N-15, line 44.
If you are filing for a trust that shared the distribution only with other trusts, figure the tax on the total lump-sum first. The trusts then share the tax in the same proportion that they shared the distribution.
If the distribution is made to more than one beneficiary, follow the instructions under Multiple Recipients of a Lump-
Sum Distribution on page 4.

# Part I

Line 2.- Income received as a pension for past services is not subject to Hawaii income tax. Only that portion of a retirement or profit-sharing plan that is received because of your retirement or the death of the employee and is paid for by the employer is considered a pension for this purpose. If you did not contribute to the cost of the plan, i.e., your employer paid the entire cost, check "Yes" on line

1. No part of the distribution is subject to Hawaii income tax. Do not complete the rest of the form. If you paid part of the cost of the plan and your employer paid part of the cost, that portion considered to have been paid by your employer is a pension.

The portion that you are considered to have paid is not a pension and is subject to Hawaii income tax. If you paid part of the cost of your plan, check "No" on line

1. You will need to complete Schedule J (Form N-11/N-15/N-40) to determine the taxable portion of your distribution.

Complete Schedule J (Form N-11/N- sion (for a participant who died before 15/N-40) If you qualify to use this form, August 21, 1996), figure the amount to enter on line 11 using the Death Benefit you will need to complete Schedule J Worksheet on this page. to determine the taxable portion of your distribution. If you elect to include NUA The remaining allowable death benefit in taxable income, include the amount exclusion should be entered on line 16 if from Box 6 of federal Form 1099-R in the you choose the 10-year tax option. amount on Schedule J (Form N-11/N-
If any federal estate tax was paid on
15/N-40), line 1. the lump-sum distribution, you must Part II decrease the capital gain amount by the amount of estate tax applicable to it. To See Capital Gain Election on page 2 figure the amount, multiply the total fedbefore completing Part II. eral estate tax paid on the lump-sum dis-Line 9. - Leave this line blank if your tribution by the decimal amount from line distribution does not include a capital gain E of the Death Benefit Worksheet. The amount, or you do not make the capital result is the portion of the federal estate gain election. Go to Part III. tax applicable to the capital gain amount.
To make the capital gain election, enter Subtract that amount from the capital on line 9 the entire capital gain amount gain amount from line H of the Death from Form 1099-R, Box 3. However, if Benefit Worksheet, and enter the result you elect to include NUA in your taxable on line 11. If you elected to include NUA income, enter on line 9 the amount from in taxable income, subtract the portion of line G of the NUA Worksheet on this page federal estate tax applicable to the capital instead of the amount from Form 1099gain amount from the amount on line G of R, Box 3. On the dotted line to the left of the NUA Worksheet. Enter the result on the entry space for line 9, write "NUA" and line 11. Enter the remainder of the federal the amount from line E of the NUA Workestate tax on line 26. sheet.
Note: If you take the death benefit exclu-To make the capital gain election when sion AND federal estate tax was paid on you are taking a death benefit excluthe capital gain amount, the capital gain NUA Worksheet (keep for your records)

Do not complete if you do not make a capital gain election
A. Enter the amount from Form 1099-R, Box 3 … A.
B. Enter the amount from Form 1099-R, Box 2a … B.
C. Divide line A by line B and enter the result as a decimal (rounded to at least three places) … C.
D. Enter the amount from Form 1099-R, Box 6 … D.
E. Multiply line C by line D and enter the result (NUA subject to capital gain treatment) … E.
F. Subtract line E from line D (NUA that is ordinary income) … F.
G. Add lines A and E (total part of distribution that can receive capital gain treatment). Enter the total here and on Form N-152, Part II, line 9 … G.
On the dotted line next to line 9, write "NUA" and the amount from line E above.
Death Benefit Worksheet (keep for your records)
A. Enter the capital gain amount from Form 1099-R, Box 3. If you elected to include NUA in taxable income, enter the amount from line G of the NUA Worksheet … A.
B. Enter the factor from Schedule J, line 16 … B.
C. Multiply line A  by line B … C.
D. Enter the amount from Schedule J, line 20 … D.
E. Divide line C by line D and enter the result as a decimal (rounded to at least three places) … E.
F. Enter your share of the death benefit exclusion* … F.
G. Multiply line F by line E … G.
H. Subtract line G from line C. Enter the result here and on Form

N-152, Part II, line 11. Write "DBE" in the amount space for line 9..H.

• Applies only for participants who died before August 21, 1996. If there are multiple recipients of the distribution, the $5,000 maximum death benefit exclusion must be allocated among the recipients in the same proportion that they share the distribution.

Enter the death benefit exclusion on amount must be reduced by both proceline 16. But see the instructions for line 9, dures discussed above to figure the corif you made a capital gain election. rect entry for line 11.
Line 11. - Multiply the amount on line 9 Line 26. - A beneficiary who receives a by the factor on line 10. Enter this amount lump-sum distribution because of a plan here. Form N-11 filers, enter this amount participant's death must reduce the taxon the Form N-11 Filers Worksheet, line able part of the distribution by any federal A, on page 4. estate tax paid on the lump-sum distribution. The reduction is made by entering Lines 12a through 12k. - Before comon line 26 the federal estate tax attributpleting lines 12a through 12k, complete able to the lump-sum distribution. Also, Part III, lines 14 through 17, even if you see the instructions for line 9 if you made do not elect to use Part III. a capital gain election.

# Part III

Lines 32 and 35. - Use the
TAX RATE SCHEDULE FOR 10-YEAR Line 14.- Enter the amount from Sched-TAX OPTION, which is printed on page 2 ule J (Form N-11/N-15/N-40), line 20. If of Form N-152 to complete lines 32 and you have elected to include NUA in your

1. taxable income, write "NUA" on the dotted line to the left of line 14.

Multiple Recipients of a Lump-Sum
Distribution. - If you shared a lump-Line 15.- If you made the capital gain sum distribution from a qualified retireelection, subtract line 11 from line 14. ment plan when not all recipients were Line 16. - If you received the distribution trusts (a percentage will be shown in because of the plan participant's death, Boxes 8 and/or 9a, Form 1099-R), figure and the participant died before August your tax on Form N-152 as follows:
21, 1996, you may be able to exclude Step 1. - Complete Parts I and II of up to $5,000 of the lump-sum from your Form N-152. gross income. If you are filing for a trust Step 2. - Use this step only if you do and the trust shared the lump-sum with not elect to include NUA in your taxable other trusts, it will share the exclusion income or if you do not have NUA. If you in the same proportion as it shared the elect to include NUA in taxable income, distribution. This exclusion applies to the skip Step 2 and go to Step 3. (Box numbeneficiaries or estates of common-law bers used below are all from Form 1099employees, self-employed individuals,
R) and shareholder-employees who owned more than 2% of the stock of an S cor- (a) If you do not make the capital gain poration. Federal Publication 939 gives election, divide the amount shown on more information about the death benefit Schedule J (Form N-11/N-15/N-40), exclusion. line 20 by your percentage of distribution shown in Box 9a. Enter this amount on Form N-152, line 14.
(b) If you make the capital gain election, subtract the amount on line 11 from the amount on Schedule J (Form N-11/N-15/N-40), line 20. Divide the result by your percentage of distribution shown in Box 9a. Enter the result on Form N-152, line 14.
(c) Divide the amount shown in Box 8 by the percentage shown in Box 8. Enter the result on Form N-152, line 18.
Step 3. - Use this step only if you elect to include NUA in your taxable income. (Box numbers used below are all from Form 1099-R.)
(a) If you do not make the capital gain election, add the amount on Schedule J (Form N-11/N-15/N-40), line 20 to the amount shown in Box 6. Divide the result by your percentage of distribution shown in Box 9a. Enter the result on Form N-152, line 14.
(b) If you make the capital gain election, subtract the amount on line 11 from the amount on Schedule J (Form N-11/N-15/N-40), line 20. Add to the result the amount from line F of your NUA Worksheet. Then divide the total by your percentage of distribution shown in Box 9a. Enter the result on Form N-152, line 14.
(c) Divide the amount shown in Box 8 by the percentage shown in Box 8. Enter the result on Form N-152, line 18.
Step 4. - Complete Form N-152, Part III, through line 36.
Step 5. - Complete the Multiple Recipient Distribution Worksheet below to figure the entry for line 37.
Form N-11 Filers Worksheet (keep for your records)
A. Enter the amount from Form N-152, line 11 … A.
B. Enter the taxable ordinary income portion of the distribution … B.
C. Add lines A and B … C.
D. Enter the sum of the amounts, if any, from federal Form 1040, lines 4b and 5b, which are attributable to any taxable income which could have been reported on federal Form 4972 … D.
E. Compare lines C and D. If line C is larger than line D, enter the

Hawaii Additional Taxable amount (line C minus line D) here and on your Hawaii Additions Worksheet, line j, on page 31 of the

Form N-11 Instructions … E.
F. Compare lines C and D. If line C is smaller than line D, enter the

Hawaii Nontaxable amount (line D minus line C) here and on your

Hawaii Subtractions Worksheet, line n, on page 31 of the

Form N-11 Instructions … F.
Multiple Recipient Worksheet (keep for your records)
A. Enter your percentage of distribution from Form 1099-R, Box 9a.. A.
B. Form N-152, line 33 minus line 36 … B.
C. Multiply line A by the amount on line B. Enter the amount here and on Form N-152, line 37. Also, write "MRD" on the dotted line next to the entry space. This amount is in place of the amounts originally obtained by completing Step 4 … C.