Form 1099-R for retirement account distributions

Taking money from your retirement accounts means you’ll receive Form 1099-R during the next tax season.  We’ll cover the basics of the 1099-R form what the form is and what it shows.  Then, we’ll help you outline how the form is used for your federal taxes.

What is the 1099-R form?

If you take money out of your retirement account for any reason, you’ll get Form 1099-R. A 1099-R form, called the “Distributions From Pensions, Annuities, Retirement, or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.” There are a number of reasons why a retirement account is distributed, but most fall into these categories:

• Annuity and pension payments
• Retirement account rollovers
• Loans against pension plans
• Early retirement account distributions

You’ll most likely report amounts from Form 1099-R as ordinary income on line 4b and 5b of the Form 1040.

The 1099-R form is an informational return, which means you’ll use it to report income on your federal tax return. If the form shows federal income tax withheld in Box 4, attach a copy – Copy B—to your tax return.

It’s sent to you no later than January 31 after the calendar year of the retirement account distribution.

What info does Form 1099-R include?

The form includes the following information. We’ve called out a few important box numbers that often drive tax questions.

• Box 1 reports the total amount of distribution from a retirement plan or annuity, this is the gross amount of dollars you received from the plan. It may be taxable or not depending on many factors.
• Box 2 reports the taxable amount of the distribution as reported by the payer. Thus, the retirement plan or annuity has determined what the amount to include in income is. This amount should be reported on line 4b or 5b of the Form 1040.
• Box 4 reports the amount the payer withheld from a distribution; this amount is very important to you as it reports the amount of taxes you have already paid on the amount distributed.
• Box 7 is the distribution code, this describes the type of distribution the taxpayer took as known by the payer. The code will help to determine the taxability of the distribution. If the payer knows the distribution was a loan or a rollover, the distribution will be described as such by a code number or letter. The codes are described on the back on the 1099-R.
• Box 9b reports your investment for a life annuity in a qualified plan or a 403(b). This is the already taxed amount you invested in the plan. This is your basis in the plan. Already taxed amounts are received tax free. A portion of every distribution that you receive will contain a return of basis. The taxpayer needs to know this number to accurately determine the taxable amount of a distribution as reported on the 1099-R.

Payer’s name and identifying information, including federal identification number

Recipient’s name and identification number

• 1- Gross distribution
• 2a- Taxable amounts – If you’re trying to figure out if you have to pay taxes on a 1099-R distribution, this is where you’ll want to look.
• 2b- Taxable amount not determined and total distribution
• 3- Capital gain
• 4- Federal income tax withheld
• 5- Employee contributions/Designated ROTH contributions or insurance premiums
• 6- Net unrealized appreciation in employer’s securities
• 7- Distribution code – Here’s where you see how your distribution is categorized. We go deeper into these 1099-R distribution codes below.
• 8- Other
• 9a- Percentage of total distribution
• 9b- Total employee contributions
• 10- Amount allowable to IRR within five years
• 11- 1^st year of designated Roth contributions
• 12- FATCA filing requirement
• 13- Date of payment
• 14- State tax withheld
• 15- State/Payer’s state no.
• 16- State distribution

1099-R distribution codes

The 1099-R includes a form field where a code is used identify the type of distribution. This is indexed on Box 7.

• Code 1: Early distribution, no known exception
• Code 2: Early distribution, exception applies
• Code 3: Disability
• Code 4: Death
• Code 7: Normal distribution
• Code 8: Corrective refunds taxable in current year
• Code G: Direct Rollover to a qualified plan, 403(b), governmental 457(b) or IRA
• Code L: Loan treated as a distribution
• Code M: Qualified Plan loan offset

Regarding 1099-R distribution codes, retirement account distributions on Form 1099-R, Code 4 are taxable based on the amounts in Box 2a.

Include the federal withholding amount reported in Box 4 as an additional withholding.

More help with the 1099-R form

Hopefully we helped answer “do I have to pay taxes on a 1099 R?” But, understanding this topic and actually completing the required tax forms is another story.

If you’re in the situation where you draw retirement income and are confused about how it’s treated from a tax standpoint, we have your back. One of our knowledgeable tax pros at H&R Block will be happy to help.