Expert: Arthur Naman - 5/17/2011

Question
I am 71 years old, I went to my fomer employer to ask for my profit sharing. I am told that my distbribution  will be taxed at 20% per IRS rules. Is this correct?

Answer
The withholding at the time you receive the distribution is 20% default. I believe you can request a different amount by contacting whoever is making the distribution.

The distribution is to then be included on your annual federal income tax return with taxes calculated based on all your income and deductions. The withholding should then be reported on your return along with any other payments made. You may then owe additionalntaxes or due a refund. Please discuss this with whoever you use to prepare your income taxes.


Please ask a follow- up if this is not clear.