You'll get a 1099-R any time you move money in your individual retirement account. The Internal Revenue Service requires financial institutions to issue a 1099-R for any distribution from an IRA over $10, which covers most changes. That rule covers all forms of IRAs, including employer-supported plans. Even rollovers to another retirement plan, such as converting a traditional IRA to a Roth IRA, usually will generate a 1099-R.
What Triggers 1099-R
You'll get a 1099-R any time you take money out of your IRA, even if it's a retirement withdrawal after you're 59 1/2 or a required minimum distribution after 70 1/2. It tells both you and the Internal Revenue Service how much was taken out, what portion is taxable and whether any taxes were withheld when the money was withdrawn. If you leave the IRA alone, you won't get a 1099-R.
Box 1 of the 1099-R shows the gross distribution and Box 2a shows how much is taxable. Box 4 shows how much tax was withheld if you opted to have tax taken out when you withdrew from the IRA. If the 1099-R is for a rollover, the taxable amount should be zero unless it is a conversion from a tax-deferred traditional IRA to an after-tax Roth IRA.
A 1099-R for a Roth IRA will show the total distribution, but Box 2a may be blank and Box 2b, "taxable amount not determined," usually will be checked. After-tax contributions to Roth IRAs are not taxable, but earnings are if they are taken out early, and Box 5 of the 1099-R will show how much you contributed. If Roth earnings are distributed, the amount will be shown in Box 2a.
You'll get a 1099-R for any IRA rollovers, such as from a simplified employee pension or SEP-IRA, unless they are trustee-to-trustee transfers. Those shifts do not require a 1099-R if they involve the same type of plan, such as moving an IRA from one institution to another. You will get a 1099-R if you change the type of IRA, from a traditional to a Roth, for instance. Code G on the 1099-R Box 7 will indicate a rollover.
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