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 plans, any individual retirement arrangements (IRAs), annuities, pensions, insurance contracts, survivor income benefit plans, permanent and total disability payments under life insurance contracts, charitable gift annuities, 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 a Form 1099-R unless part of the distribution is taxable and part is nontaxable.
Box 1 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, non-periodic payment or as a total distribution. The amount entered in Box 1 flows through to Form 1040, Line 15a or Line 16a depending on whether the distribution was from an IRA or some other type account type.
Box 2a shows the portion of the distribution which is generally taxable. If there is no entry in this box, the taxable amount was not determined by the payer 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. Any amount entered in Box 2a flows through to Form 1040, Line 15b or Line 16b depending on whether the distribution was from an IRA or some other type account type.
Box 2b contains two boxes which can be checked which provided information from the payer about the distribution. If the first box is checked, the payer was unable to determine the taxable amount and Box 2a should be blank. If the second box is checked, the distribution was a total distribution and closed out the account.
Box 3 is used to report 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)). See 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 shows any federal income tax withheld when the distribution was received by the taxpayer.
Box 5 generally shows the taxpayer's investment in the contract (after-tax contributions), if any, recovered tax free this year.
Box 6 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 displays the distribution code, which identifies the type of distribution that was received. For information on entering select distribution codes into [#AFFILIATE#], see the Additional Resources below.
Box 8 displays 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 displays the percentage of a total distribution received by the taxpayer when the distribution was made to more than one person.
Box 9b displays 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. See Publication 575 - Pension and Annuity Income.
Box 10 See page 31 of Publication 575 - Pension and Annuity Income for how to report an amount entered in box 10.
Box 11 displays the 1st 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 (5) years of first contribution.
Boxes 12 – 17 display state amounts withheld and any part of the distribution that has been reported to the state.
Certain retirement payments or distributions a taxpayer receive 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 "Form 1099-R - Entering Rollover Retirement Plan and IRA Distributions" for information on entering distributions where some or all of the amount distributed is rolled over to another retirement plan or IRA. See: 1099-R - Rollovers of Retirement Plans and IRA Distributions.
When the taxpayer does not roll over a retirement distribution that is reported on Form 1099-R, the proceeds that they receive will normally be 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) and it may (with certain distribution codes discussed below) also be subject to a 10% additional tax on early distributions unless the taxpayer is eligible for one of the exceptions to the 10% additional tax on early distributions. Also see: Publication 590-B -Distributions from Individual Retirement Plans for information on Roth distributions and The Simplified General Rule Worksheet for information on entering the taxable amount for distributions from annuities.
To enter a distribution into [#AFFILIATE#] that is reported on a Form 1099R - Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. from the Main Menu of the Tax Return (Form 1040) select:
IRA, Pension Distributions (1099R, RRB-1099-R)
Select 'New' and whether the Payee on the 1099-R is the Taxpayer or Spouse
Enter the Payer EIN, Name and Address,
Enter the Gross Distribution in Box 1 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, qualified charitable distributions and enter the difference in Box 2a, Taxable amount.
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 a '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 guide on entering Form 1099-R into the [#AFFILIATE#] program. This is not intended as tax advice.
Additional Knowledgebase Resources (Distribution Codes - Box 7):
Code 1 - Early Distribution & Code 2 - Early Distribution, exception applies (under age 59 1/2) - Form 5329 - Tax on Early Distributions
Code 3 - Disability - Form 1099-R - Distribution Due to Disability
Code 4 - Death - Form 1099-R - Distribution Due to Death of Plan Participant
Code G - Direct Rollover - Form 1099-R Rollover of Retirement Plan and IRA Distributions