In a NutshellA 1099-R tax form reports distributions from a retirement plan — income you might have to pay federal income tax on. But the form isn’t just for retirees drawing on their nest eggs. There are other situations when you might get a 1099-R before you retire.
If you get a 1099 form of any kind, it’s usually related to some type of income you received that you may have to pay taxes on. A 1099-R is no exception — it reports distributions from retirement accounts.
Distributions from other sources can also be reported on a 1099-R, and it’s possible to get one even if you’re not a retiree making withdrawals to fund your retirement. Knowing what to do with a 1099-R can help you accurately report the income you received, and that you may have to pay tax on.
Let’s answer the question “What is a 1099-R?” and talk about what to do if you receive one.
- What is a 1099-R?
- When might I receive a 1099-R?
- What information is on a 1099-R?
- What should I do with Form 1099-R?
A 1099-R is an IRS information form that reports potentially taxable distributions from certain types of accounts, many of which are retirement savings accounts. You’ll generally receive one for distributions of $10 or more.
The plan or account custodian completing the 1099-R must fill out three copies of every 1099-R they issue.
- One for the IRS
- One for the recipient of the distribution
- One for any applicable state, city or local tax department
The IRS requires issuers to file a 1099-R whenever they make an eligible distribution of $10 or more from …
- Profit-sharing or retirement plans
- Insurance contracts
- Survivor income benefit plans
- Life insurance contracts that provide payments for total and permanent disability
- Charitable gift annuities
This means that your retired grandparents who regularly make withdrawals from their IRAs or 401(k)s to fund their lifestyle in retirement should get a 1099-R for every plan they draw on. But you might also get a 1099-R even while you’re actively working. If you’re not yet retired, here are some instances when you might receive a 1099-R.
- You take a payout on a matured life insurance policy.
- You take an early distribution from a traditional IRA.
- You roll over a 401(k) to an IRA or close a traditional or Roth IRA.
- You took a loan from a 401(k) and failed to repay it.
Like other 1099s, a 1099-R divides information into two sections. On the left side of the form are boxes for …
- The name, address and taxpayer identification number, or TIN, of the payer
- The name, address and TIN of the recipient
- An account number, for the payer to distinguish your account
- Date of payment
Here are the boxes on the right side of the form.
- Box 1. Gross distribution from the plan
- Box 2a. Taxable portion of the distribution (if known by the payer)
- Box 2b. Checkboxes indicating whether or not the payer has calculated the taxable portion of the distribution and whether it was a total or partial distribution of the plan balance
- Box 3. Portion of the distribution allocated to capital gains
- Box 4. Federal income tax withheld from the distribution (if any)
- Box 5. Portion of the distribution allocated to employee contributions, designated Roth contributions or insurance premiums
- Box 6. Net unrealized appreciation in employer’s securities
- Box 7. A distribution code designed to specify the type of distribution received. This could help the taxpayer determine whether their distribution is taxable
- Box 8. Other
- Box 9a. Your percentage of total distribution
- Box 9b. Total employee contributions
- Box 10. Amount allocable to IRR within five years
- Box 11. First year of designated Roth contributions
- Box 12. FATCA filing requirement checkbox
- Box 13. Date of payment
- Box 14. Amount of state tax withheld
- Box 15. Payer’s state identification number
- Box 16. Amount of state distribution
- Box 17. Amount of local tax withheld
- Box 18. Name of locality (if applicable)
- Box 19. Amount of local distribution
The reasoning behind the information in each of these boxes can be complicated. The IRS instructions for Form 1099-R explain what each box means.
If you need to report the information in your 1099-R as income when you prepare your tax return, you’ll need to gather all of your 1099-Rs. Total the amounts on Box 1 of all the forms. You’ll then need to enter the information into the correct box on Form 1040.
Multiple factors will determine whether you’ll have to pay tax on any distributions reported on a 1099-R. Determining what portion of a distribution is taxable can be complicated. Guidance on what to do with information on your 1099-R can be found in the instructions for the form and in the instructions for your 1040 tax return.
Alternatively, if you use tax-preparation software or an online tax preparation and filing service, the technology can do the calculations for you based on the information you enter.Learn more about 1099 forms and what they mean
It’s possible to receive a 1099-R if you’re not retired, especially if you took a distribution from a retirement account during the tax year. You do need to report all retirement-account distributions on your federal tax return, even if they’re tax-free rollovers. But Box 2a, the distribution codes in Box 7, and the instructions for Form 1040 should help you determine whether some or all of the withdrawal is taxable.