Understanding Form 1099-R: Distributions from Retirement Accounts
Form 1099-R is used to report distributions from retirement plans, including pensions, annuities, IRAs, profit-sharing plans, and insurance contracts. It is issued by the payer, trustee, or plan administrator to individuals who receive distributions of $10 or more.
Key Boxes on Form 1099-R
- Box 1: Total distribution amount. This includes all payments made during the year.
- Box 2a: Taxable amount. This is the portion of the distribution subject to income tax.
- Box 3: Capital gain. If any part of the distribution is taxable as a capital gain, it is reported here and included in Box 2a.
- Box 7: Code indicating the type of distribution. Accurate code entry is critical for IRS processing and proper tax reporting.
Important Reporting Rules
- Do not enter negative amounts in any box on Form 1099-R.
- For distributions from traditional IRAs with no readily available fair market value (FMV), enter Code K in Box 7.
- If a loan is treated as a deemed distribution, report it on Form 1099-R with Code L in Box 7 and apply section 72 taxation rules.
- For excess contributions or excess aggregate contributions, file a corrected Form 1099-R for the correct amount and a separate form for the excess amount and allocable earnings.
Special Cases
- Governmental Section 457(b) Plans: Distributions from these plans are reported on Form 1099-R, not Form W-2.
- Charitable Gift Annuities: If cash or capital gain property is donated in exchange for an annuity, two distributions are reported on Form 1099-R.
- Roth IRA Transfers: Transfers between Roth IRAs (not Roth SIMPLE IRAs) are reportable under specific conditions.
Filing Requirements
The payer must file Form 1099-R using the same name and Employer Identification Number (EIN) used for tax withholding and filing Form 945. Online fillable versions of Copies B, C, 1, and 2 are available for easy furnishing and recordkeeping.
Source:
Form 1099-R Instructions
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.