M1LS: Tax on Lump-Sum Distribution (2024)
Minnesota · Minnesota DOR · Used for tax years 2024
Minnesota Schedule M1LS calculates the tax on the ordinary income portion of a lump-sum distribution using Minnesota's five-year averaging method. You must complete federal Form 4972 before completing this schedule.
Who files this form
You must file 2024 Schedule M1LS if all three apply:
- You received a lump-sum distribution from a pension, profit-sharing, or stock bonus plan in 2024.
- You filed federal Form 4972, Tax on Lump-Sum Distributions.
- You were a Minnesota resident when you received any portion of the distribution.
If you received part of the distribution as a nonresident and part as a resident, complete Schedule M1LS using the full amount from federal Form 4972.
What you'll need
Have these forms and information ready:
- Completed federal Form 4972. You must complete it before Schedule M1LS and include a copy when filing Form M1.
- Form M1 and its instructions. You need the tax table in the instructions to calculate the tax.
- Schedule M1R, if you completed it. It is used to determine the amount on line 2.
- Federal Form 1099-R, if you shared the distribution. The multiple-recipient calculation uses the percentage in box 9a.
- Schedule M1M, if you made a federal capital gain election. Report the amount from Form 4972, line 6, on Schedule M1M, line 4.
- Your name and Social Security number, as requested on the schedule.
How to file
Complete federal Form 4972 first, then complete Schedule M1LS. Round amounts to the nearest whole dollar.
- Start line 1 with the amount from federal Form 4972, line 19.
- If you did not complete Schedule M1R, enter zero on line 2. If you did, follow the line 2 instructions.
- Follow the schedule’s calculations. For lines 5 and 9, use the tax table in the Form M1 instructions and the column for single persons.
- If you did not complete federal Form 4972, lines 20 through 22, skip Schedule M1LS, lines 7 through 10, and enter line 6 on line 11.
- Enter the line 11 result on Form M1, line 14, and check the Schedule M1LS box on that line. If you shared the distribution, follow the multiple-recipient instructions before entering line 11.
Include Schedule M1LS and a copy of federal Form 4972 when you file Form M1.
Estates and trusts: Include the line 11 amount on Form M2, line 12, and check the Schedule M1LS box.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Using federal ten-year averaging for Minnesota. Minnesota requires five-year averaging.
- Leaving out the nonresident portion of a distribution. If you received portions as both a resident and a nonresident, include the full amount from federal Form 4972.
- Treating a federal capital gain election as allowed by Minnesota. Minnesota does not allow this election for lump-sum distributions. Report Form 4972, line 6, as an addition on Schedule M1M, line 4.
- Using the wrong tax-table column. The schedule directs you to use the column for single persons on lines 5 and 9.
- Forgetting attachments or the checkbox. Include Schedule M1LS and a copy of federal Form 4972 with Form M1, and check the Schedule M1LS box on Form M1, line 14.
- Not rounding amounts. Round to the nearest whole dollar.
Questions people ask
What if I moved into or out of Minnesota in 2024?
Complete Schedule M1LS if you were a Minnesota resident when you received any portion of the distribution. If you received portions as both a resident and a nonresident, include the full amount from federal Form 4972.
Can I use the federal ten-year averaging method for Minnesota?
No. Minnesota requires the five-year averaging method, even though federal Form 4972 allows only ten-year averaging.
Does Minnesota allow a capital gain election for a lump-sum distribution?
No. Report any capital gain election amount from federal Form 4972, line 6, as an addition to federal taxable income on Schedule M1M, line 4.
What if I shared the lump-sum distribution with other recipients?
For a shared distribution from a qualified retirement plan, subtract Schedule M1LS, line 10, from line 6. Multiply the result by the percentage in box 9a of federal Form 1099-R. Enter that amount on line 11 and print “MRD” in the space to the left of line 11.