Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., is a source document that is sent to each person that receives a distribution of $10 or more from any profit-sharing or retirement plan, any individual retirement arrangement (IRA), annuity, pension, insurance contract, survivor income benefit plan, permanent and total disability payment under a life insurance contract, charitable gift annuity, etc. Also, reported on Form 1099-R are certain death benefit payments made by employers that are not made as part of a pension, profit-sharing, or retirement plan, and disability payments made from a retirement plan.
Amounts totally exempt from tax, such as workers' compensation and Department of Veterans Affairs (VA) payments are not typically reported on Form 1099-R unless part of the distribution is taxable and part is nontaxable.
Box 1 - Gross Distribution shows the total or gross amount that was distributed to the taxpayer this year. The amount may have been a direct rollover, a transfer or conversion to a Roth IRA. It also may have been received as a periodic payment, a non-periodic payment, or as a total distribution.
Box 2a - Taxable Amount shows the portion of the distribution that is generally taxable. If there is no entry in this box, the payer wasn't able to determine the taxable amount and it will have to be determined by the taxpayer. When this occurs, the first box in Box 2b should be checked. Typically the gross distribution amount that is reported on Form 1099-R, Box 1 will be deemed taxable and that amount will also be reflected in Box 2a. However, the amount that is deemed taxable in Box 2a may be different due to direct rollovers, qualified Roth distributions, Qualified Charitable Distributions, withdrawals of contributions during the year in which they were made to an IRA, annuity payments to which the taxpayer contributed, and any other amounts that were already taxed. See Publication 575 - Pension and Annuity Income in order to determine the taxable amount.
Note: In tax year 2020, if the taxpayer received the distribution for COVID-related reasons and is spreading the taxable income out over three years, this box should be left blank and Form 8915-E should be completed. The taxable amount will flow to Form 1040 from Form 8915-E.
Box 2b contains two check boxes that provide information from the payer about the distribution.
- Taxable amount not determined - The payer was unable to determine the taxable amount, so it's up to the taxpayer to determine it.
- Total distribution - The entire balance of the account has been distributed.
Box 3 - Capital gain (included in box 2a) is used to report the taxable gain included in Box 2a in two scenarios:
- If the taxpayer received a lump-sum distribution from a qualified plan and was born before January 2, 1936 (or the taxpayer is the beneficiary of someone born before January 2, 1936), they may be able to elect to treat this amount as a capital gain on Form 4972 (not on Schedule D (Form 1040)). For more information, see the Form 4972 instructions.
- For a charitable gift annuity, report as a long-term capital gain as explained in the Instructions for Form 8949.
Box 4 - Federal income tax withheld shows any federal income tax the payer withheld and remitted to the IRS.
Box 5 - Employee contributions / Designated Roth contributions or insurance premiums generally shows the taxpayer's investment in the contract (after-tax contributions), if any, recovered tax free this year.
Box 6 - Net unrealized appreciation in employer's securities shows the taxpayer received a distribution of employer's securities (stock) from a qualified pension plan. This amount is included in box 1, but not included in box 2a, and it represents the appreciation in the stock value that occurred since the original contribution of stock.
Box 7 - Distribution code(s) shows the distribution code. See here for the meaning of the different codes.
Box 7 - IRA/SEP/SIMPLE check box will be checked if the distribution is from and IRA, SEP, or SIMPLE plan.
Box 8 - Other shows the value of any annuity contract that was part of the distribution. This amount is not taxable when it is received and is not included in boxes 1 or 2a.
Box 9a - Your percentage of total distribution shows the percentage of a total distribution received by the taxpayer when the distribution was made to more than one person.
Box 9b - Total employee contributions shows the taxpayer’s total investment in a life annuity from a qualified plan. This amount is used to compute the taxable portion of the distribution. For more information, see Publication 575 - Pension and Annuity Income.
Box 10 - Amount allocable to IRR within 5 years - See page 31 of Publication 575 - Pension and Annuity Income for how to report an amount entered in box 10.
Box 11 - 1st year of desig. Roth contrib. shows the first year that the taxpayer made a contribution to a designated Roth account. This information is used to determine whether any earnings on the distribution may be subject to the 10% additional tax on early distribution. Earnings on Roth contributions are subject to the 10% additional tax when withdrawn within five years of the first contribution.
Boxes 14 – 19 show state and local tax withholdings as well as the part of the distribution reported to the state.
Note that certain retirement payments or distributions a taxpayer receives from a retirement plan or IRA can be “rolled over” by depositing the payment into another retirement plan or IRA within 60 days of the date of distribution. By rolling over the retirement plan distribution, the taxpayer generally does not pay tax on any portion of the rollover amount until they later withdraw it from the new plan. However, the taxpayer must still report the distributions on their tax return.
Distributions that can be rolled over are called "eligible rollover distributions." See here for more information about rollover distributions.
When the taxpayer does not roll over a retirement distribution reported on Form 1099-R, the proceeds are normally taxable (other than qualified Roth distributions, Qualified Charitable Distributions, withdrawals of contributions during the year in which they were made to an IRA, and any amounts already taxed).
Additionally, if the taxpayer was under age 59-1/2 at the time of the distribution, the distribution may also be subject to a 10% additional tax on early distributions unless the taxpayer is eligible for an exception to the penalty. See here for more information about exceptions.
See here for information on the Simplified Rule Worksheet related to entering the taxable amount for distributions from annuities.
To enter a distribution reported on Form 1099-R in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:
- Income Menu
- IRA, Pension Distributions (1099R, RRB-1099-R)
- New. If prompted, indicate whether the payee on the 1099-R is the Taxpayer or Spouse.
- Enter the Payer EIN, Name, and Address.
- Enter the Box 1 amount as it is shown on the 1099-R.
- Enter the taxable amount in Box 2a. If this amount is not determined by the payer (or if the taxable amount as determined by the taxpayer is different from the amount determined by the payer) subtract from the Gross Distribution in Box 1 any rollovers or qualified charitable distributions and enter the difference in Box 2a.
- Enter all remaining items on the 1099-R. When entering the Distribution Code in Box 7, if the Code is a 7 or G, no further action is necessary. However, if the Distribution Code is 1 a prompt will be given to Select "Form 5329 Options" which is the 10% Additional Tax for Early Withdrawal. Unless an exception to the 10% additional tax on early distributions is available, Option 2, "Transfer 1099-R Box 2a to Form 5329, Part 1, Line 1" would be selected if the distribution is from a pension plan or IRA. In this situation, if the taxpayer did not roll over the distribution or qualify for an exemption, the 10% additional tax or penalty will apply.
Note: This is a general guide on entering Form 1099-R into the TaxSlayer Pro program. This is not intended as tax advice.