A lump sum distribution may be available to you whenever you’re separated from your employer, whether due to retirement, a job change or layoff. Depending on how long you’ve been with your employer, you may have to manage a lump sum distribution of a considerable amount.

To be considered a lump sum distribution for tax purposes, the following must apply:

• The money must come from an IRS-qualified plan, such as a 401(k), profit-sharing or other qualified retirement plan.
• It must be payable due to separation from service (but not if you are self-employed), death, disability (only if you are self-employed) or after you have reached age 59 1/2.
• You must receive the entire amount in your account within one tax year.