Is IRS still doing income averaging?

Answer 1

over several years you mean? They used to allow it over a 3 year period, but that stopped along time ago.

Answer 2

Not in the sense they used to - that ended quite awhile back.

For lump sum distributions from retirement plans, there is something like the old income averaging that is sometimes permitted. The person using this must have been born before 1/2/1936. It's called 10-year tax option.