You should receive Form 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.
The instructions for Form 1099-R, which you'll find by searching for this form by its number at IRS.gov/forms, include exceptions to the reporting requirements.
What Triggers a 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've reached age 59 1/2 or a required minimum distribution after age 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Revenue Service how much was taken out, what portion is taxable and whether any taxes were withheld when the money was withdrawn.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.
IRA Distribution Reports
Box 1 of the 1099-R shows the gross distribution and Box 2a shows how much of that distribution 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's a conversion from a tax-deferred traditional IRA to an after-tax Roth IRA.
Roth IRA 1099-R
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," will usually be checked. After-tax contributions to Roth IRAs are not taxable, but earnings are if they're 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.
1099-R for IRA Rollovers
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'll get a 1099-R if you change the type of IRA, such as from a traditional IRA to a Roth. Code G on the 1099-R Box 7 will indicate a rollover.
Reporting 1099-R Income
Because the IRS considers all 1099-R payments as taxable income, you're required to report this on your tax return. Even if the payer of your 1099-R income is not required to provide you a 1099-R (because the annual amount you receive is less than $10), you're still required to report this amount. As a heads-up, you may want to call the IRS at 1-800-829-1040 if you have not received a 1099-R by February 15.
Filing 1099-R With Tax Return
If you've made the shift to filing your tax return electronically, you'll be glad to know that you can also include 1099-R income on your e-filed return. If you do not use a professional tax preparer who e-files your return for you, the IRS offers some digital self-filing options. Efile.com, an IRS-authorized electronic provider, charges taxpayers a nominal fee to use step-by-step prompts that help you file your own tax return.
You'll find free filing options at IRS.gov/freefile. If your income is below $66,000, you'll be able to use the "Free File" option, and if your income is above $66,000, you'll be able to use the "Free File Fillable Forms" option.
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