 Here we are in our example Form 1040 populating it with LASERT tax software. You don't need tax software to follow along, but if you have access to it, it's a great tool to run scenarios with. You can also get access to the Form 1040 related schedules and forms at the IRS website, irs.gov, irs.gov, starting point as usual, single filer, Mr. Anderson, no dependents, 100,000 at the W2 income to start with. And then we've got the standard deduction 12,950, getting us to the taxable income 87,050. And we mirror that in our worksheet over here. This is our tax formula, 87,050, depending on the software to do the calculation on the second page, where we have the calculation of the 14774. And then we have our withholdings getting us to the amount of refund, which is mirrored here. But we're focused here now on the tax calculation first page side of things. And we're looking now at distributions from an IRA distribution. Now remember, when we're thinking about IRA distributions, you can kind of think in general of the general concept of the IRS trying to incentivize us to save for retirement. What they're doing is taking, they're not coming up with anything new, like it's not like they came up with a new investment tool. This is a totally new investment tool. No, they're just saying that if you use your normal investment tools, which are usually mutual funds and put them under the umbrella of an IRA, then you possibly could get tax benefits of that. The typical tax benefit, whether it be a 401k, 403b, IRA distribution is that you don't have to include it in income, or you get to remove it from income with an above the line deduction when you put it in. And then at the, when you get the distribution at retirement, then that's when you have to include it in income. So you get this tax deferral type of situation. Now we're focusing here on the IRA, but you have similar kind of concepts with the 401k and whatnot in that if you were to take the money out early, then you're going to have to pay taxes on it because you're going to have to pay taxes when you pull it out at retirement or whenever you pull it out. But you also might have penalties by that point in time. So the general rule would be that during someone's working years, you would expect most of their income to be some kind of earned income, such as W2 income, Schedule C income, and that kind of thing. And then in retirement years, you would expect to see people having more income, not from W2 income because they're past their working years and having distributions from things like IRAs and pension plans down here. And you could have similar kind of situations where you have withholdings and whatnot from the IRA distributions and the pension distributions. What you want to be very careful of and mindful of when talking to clients is that if they're trying to go from one job to another, or they're going from one financial company to another, then they don't want to take the money out of their IRA or 401ks or so on, but rather make sure that they record it as a rollover. Otherwise, they're going to have this issue of a distribution problem because they'll be penalized for an early distribution. So that's the general idea. Charming rule. But yes, that is the general idea. So let's first just think about a situation where we'll change the age. So we have someone that's not going to be hit with a penalty for taking the distribution early and then we'll look at a penalty type of situation. All right. So I've changed the age now so they're in retirement age. And then the code I'm going to put as it's going to be a normal distribution. And that's going to be a code that will typically be reflected on the form you're going to receive, which is going to be something like a 1099R, which will be required to be given by the government from the financial institution. US law requires financial institutions typically. And it's usually fairly straightforward where you've got the gross distribution up top, the taxable amount below it. If it's a normal distribution, you would expect these two things to be the same because you got the tax benefit when you put the money in. Therefore, the distribution is taxable. The distribution code then down here on line seven would be a normal distribution code, which I believe is a seven. And if you see something unusual on this line, you can take a look at this second page over here of the form or look it up in the IRS website, gives you a list of the distribution codes. First, we have the early distribution. That's the one you don't want to see. In most cases, they're under age 59 and a half, right? Because they took the distribution early before the retirement years. Early distribution exception applies. So now you've got an early distribution, but there's an exception. Disability possibly having an exception death, except prohibited trans transaction section 1035 exchange. That's an unusual one to see seven normal distribution. So if someone is over or in retirement, you would expect then that would be the code that you would expect to see a normal kind of distribution at that point. If they're under the retirement age, then you expect to see a number one. That's what you don't want to see unless you can get to some other exception other than the age requirement to pull the money out. And then eight excess contributions plus earnings nine cost of current life insurance protection and so on. So let's assume it's just a normal distribution for now. And we're going to say that it's an IRA. So let's check it off as an IRA. And I'm going to say it's for $1,000 and all of it is taxable. So that's going to be my data input because