Social Security and Medicare Tax/Lump Sum Distrib.

[Guest Amanda Davis]

I'm hoping someone can help me. I'm brand new to the DB world and have a tax question:

Is the lump sum portion earned after January 1, 1994 of a distribution subject to Social Security and Medicare taxes?

I know the answer is here somewhere--I just can't find it!

Thanks in advance!

[mwyatt]

God I hope not, as we've never had anyone pay SS taxes on a DB (or PS/MP/401(k) for that matter) LS distribution. I would venture a NO.

[Guest Harry O]

You must be talking about a lump sum distribution from a NON-QUALIFIED plan. In that case, yes, FICA taxes GENERALLY apply to these payments. See IRC Section 3121(v) and the regs thereunder.