Schedule G-1: Tax on Lump-Sum Distributions (2025)

Who files this form

Schedule G-1 is for choosing special tax treatment for lump-sum distributions from qualified plans. Complete Part I to check whether you can use it for 2025.

You can use the schedule only if:

• The distribution was the participant’s entire balance from all of an employer’s qualified plans of one kind: pension, profit-sharing, or stock bonus.
• You did not roll over any part of the distribution.
• Either you received the distribution as a beneficiary of a participant born before January 2, 1936, or you were the participant, were born before that date, and had participated in the plan for at least five years before the distribution year.
• You did not previously use Schedule G-1 for a distribution received after 1986 for the same participant.

What you'll need

• Your tax return, Form 540, Form 540NR, or Form 541. Use the same name or names and provide your SSN, ITIN, or FEIN.
• Federal Form 1099-R. The schedule uses box 3 for capital gain, box 2a for the taxable amount, and box 8 for the current actuarial value of an annuity, if applicable.
• The Schedule G-1 instructions if you choose 10-year averaging. Lines 19 and 25 require the Tax Rate Schedule in those instructions. The form also directs you to the instructions for certain other entries, including the death benefit exclusion.

How to file

Attach Schedule G-1 to Form 540, Form 540NR, or Form 541.

Complete Part I to check eligibility. Use Part II to choose the 5.5% capital gain election and Part III to choose the 10-year averaging method.

Report the tax from line 28 on Form 540, line 34; Form 540NR, line 41; or Form 541, line 21b. If you complete Part II but do not elect to use Part III, report line 7 on the applicable return line instead.

Common mistakes

• Do not use Schedule G-1 if Part I tells you that you are ineligible, including if you rolled over any part of the distribution.
• If line 12 is $70,000 or more, skip lines 13 through 16 and enter the line 12 amount on line 17.
• Do not enter more than $10,000 on line 13.
• If the result on line 14 is zero or less, enter 0.
• If line 11 is blank, skip lines 21 through 26 and enter the line 20 amount on line 27.
• Round the result on line 21 to at least three decimal places.
• Use the Tax Rate Schedule in the instructions for lines 19 and 25. For multiple recipients, see the instructions.

Questions people ask

Can I use Schedule G-1 if I rolled over part of the distribution?

No. Part I says not to use this form if you rolled over any part of the distribution.

What tax choices does the schedule offer?

Part II lets you choose the 5.5% capital gain election. Part III lets you choose the 10-year averaging method. The form directs you to the instructions for these choices.

What amount goes on line 8?

If you completed Part II, enter federal Form 1099-R, box 2a minus box 3. If you did not complete Part II, enter box 2a. The form also directs you to the instructions.

Does the form include a death benefit exclusion?

Yes. Line 9 provides for a death benefit exclusion for a beneficiary of a participant who died before August 21, 1996. The form directs you to the instructions for details.

Can I use Schedule G-1 again for the same participant?

Not if you used it in a prior year for any distribution received after 1986 for the same participant for whom the 2025 distribution was made.

Official sources

• https://www.ftb.ca.gov/forms/2025/2025-540-g-1.pdf