What is Form 1099-R?

Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., is used to report retirement benefits. If you withdrew money from your retirement account for the first time this year due to COVID-19, you will need to file Form 1099-R. 

Will I receive Form 1099-R?  

You will receive Form 1099-R if you received a $10 or greater distribution from your retirement plan during the tax year. You may also receive a variation of Form 1099-R if your plan falls under a more specific category. Other versions of the form include:   

  • Form CSA 1099R  
  • Form CSF 1099R  
  • Form RRB-1099-R  

What kinds of income are reported on Form 1099-R?  

Pension and annuity payments  

Income taxes on most retirement plan contributions are deferred, meaning that income tax is not paid on contributed funds until you withdraw them.  

Pension and annuity distributions are usually made to you if you are retired, disabled, or the beneficiary of a deceased person.  

Rollovers  

A rollover occurs when you move funds from one account to another. You do not typically have to pay taxes on this money.  

There are two types of rollovers. A direct rollover is reported on Form 1099-R in box 7 with the code G or H. An indirect rollover occurs when you take possession of the retirement funds and then deposit them into another retirement account. You can typically only perform one indirect rollover per 12 months. 

You must rollover the funds into a qualified account within 60 days of distribution if you want to avoid taxes and early distribution penalties.  

Funds distributed directly to you are generally subject to 20% federal income tax. You will be required to contribute additional funds to make up for the amount withheld, so the rollover amount is equal to the distribution.  

If your rollover meets all of the IRS guidelines, the distribution will not be taxed, but you will still need to report the amount on your tax return. 

Loans  

Sometimes you are allowed to take a loan against your pension plan. Most loans like this are repaid with interest and do not qualify as a distribution.  

If you take a loan but do not make the payments on time, you will receive Form 1099-R. If this happens, the amount you failed to repay qualifies as a distribution and is reported in box 7 with code L.  

Early distributions  

If you withdraw money from a retirement account before you reach age 59 1/2, it is considered an early distribution and will be subject to 10% federal tax. Some states also impose their own tax on early distributions. 

There are a few exceptions to this rule, including: 

  • Disability  
  • Medical expenses exceeding 10% of your adjusted gross income (AGI) 
  • Divorce 
  • An IRS levy 
  • Death  

Many Americans borrowed money from their retirement accounts for the first time during the COVID-19 pandemic. Coronavirus Related Distributions need to be reported as income via Form 1099-R as early distributions under provisions of the CARES act. If you receive Form 1099-R for the first time this tax season, you are not alone.  

The CARES Act allows you to report your Coronavirus Related Distributions over the course of 3 years instead of all at once. This will spread out the taxes, so you aren’t paying them all in 2021. 

What do the different boxes report on Form 1099-R? 

Box 1 shows the amount of the distribution that you received this year from a direct rollover, a transfer, or a conversion.  

Box 2a shows the portion of this distribution, which is taxable.  

Box 4 shows if any federal income tax was withheld when you received the distribution. 

Box 6 shows that you received a distribution of employer’s securities (stock) from a qualified pension plan. 

Box 7 shows the distribution code. 

Box 8 reports the value of any annuity contract that was part of the distribution. This amount is not taxable. 

Box 9a shows the percentage of the total distribution you received if the distribution was made to more than one person. 

Box 9b displays your total investment in a life annuity from a qualified plan.  

Box 11 shows the first year that you contributed to a designated Roth account. 

Boxes 12 – 17 show any state amounts withheld, and any portion of the distribution reported to the state. 

TaxSlayer will walk you through the steps of reporting your retirement income found on Form 1099-R. All you have to do is have all your forms, records, and receipts ready and we guide you through the rest.