Form 1099-R is a tax form that payees use to report distributions from pensions, profit-sharing plans, annuities, IRAs, insurance contracts and other retirement plans. While a Form 1099-MISC is used to report non-wage compensation, a 1099-R is used to report benefit payments received from an established plan or contract. Depending on your financial situation and the type of distribution you received, some, all or none of your distribution may be taxable.
You'll receive a 1099-R from your plan administrator if you received more than $10 in distributions that year. 1099-R is most commonly used to report benefit distributions but sometimes reports other information as well. For example, it can also be used to report a conversion, which is when funds are transferred from a retirement plan to a Roth IRA. A 1099-R is also used to report rollovers -- when you move funds from a retirement plan into another retirement plan -- as well as recharacterizations, which occur when you reverse a rollover or a conversion.
Reporting Information from Form 1099-R
The IRS instructions for Form 1099-R explain how to report information from the form on your taxes. The way you report this depends on the type of distribution you received. IRA distributions and distributions from pensions and annuities listed in box 1 should be reported both on the main Form 1040 and Form 8606. If you received a lump sum distribution, report it on Form 4972. If you received disability payments and haven't reached the minimum retirement age, report the distributions as "Wages, salaries, tips, etc." on Form 1040. Tax-free transfers of life insurance, long-term care, annuity or endowment contract benefits are reported with Code 6 in box 7 and do not need to be reported on your tax return.
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Taxable Portion of 1099-R
Some or all of your distribution might not be nontaxable. The rules regarding taxation of distributions differ depending on the type of benefit payment you received. Your plan administrator will note the taxable portion of your distributions in box 2a, Taxable amount. Sometimes, your plan administrator doesn't have enough information to determine whether or not your distribution is taxable. If this is the case, the administrator will leave box 2b blank and check box 2b, Taxable amount not determined. If box 2b is checked, work with your tax accountant to determine how much of your distribution is taxable. Many tax software programs can also determine this information on your behalf and categorize it appropriately.