Lump Sum Pension Tax Calculator (US)

Lump Sum Amount ($):

Your Current Age:

Tax Filing Status:

Other Annual Taxable Income ($):

State of Residence:

I plan to roll over the lump sum into another qualified retirement account (e.g., IRA)

Estimated Tax Impact:

Total Estimated Tax:

$0.00

Estimated Federal Income Tax:

$0.00

Estimated 10% Early Withdrawal Penalty:

$0.00

Estimated State Income Tax:

$0.00

Net Lump Sum After Estimated Taxes:

$0.00

Disclaimer:

This calculator provides a simplified *estimate* of potential tax liabilities and penalties based on common US tax rules for lump sum pension distributions. It does not account for all deductions, credits, or specific state/local tax variations, nor does it factor in the alternative minimum tax (AMT) or specific NUA rules. The actual tax owed can vary significantly based on your complete financial situation, other income, and specific plan details. For accurate and personalized tax advice, you *must* consult a qualified tax professional or financial advisor.

Advanced Considerations:

Rollovers: If you roll over your lump sum into a Traditional IRA or another qualified retirement plan, the amount is generally not immediately taxable. Taxes are deferred until you withdraw from the new account, and early withdrawal penalties may apply to those future withdrawals.
Tax Brackets: A large lump sum can push you into a higher federal and state income tax bracket for the year it’s received, significantly increasing your overall tax liability.
Net Unrealized Appreciation (NUA): If your pension includes employer stock, special NUA rules might allow a portion of the distribution (the “appreciation”) to be taxed at long-term capital gains rates rather than ordinary income rates, but only if specific conditions are met and it’s not rolled over. Consult a tax professional for NUA strategies.
Mandatory Withholding: If you do not directly roll over your lump sum, federal law generally requires a mandatory 20% federal income tax withholding. This calculator estimates the total tax, not just the withholding.
State-Specific Rules: State income tax rules vary widely. Some states don’t tax pension income at all, while others do. This calculator provides a simplified estimate for a few states.
Professional Advice: Given the complexities and potential impact on your retirement, it is highly recommended to seek advice from a Certified Financial Planner (CFP) or tax advisor before making decisions about lump sum pension distributions.