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1099-R: Distributions From Retirement Plans

November 12th, 2014 No comments

Form 1099-R is an informational form used by financial institutions to report distributions of more than $10 to account holders from a variety of sources including:

  • Pensions and annuities
  • Profit sharing and retirement plans
  • IRA’s
  • Insurance contracts

Most of these distributions are from some type of retirement plan or fund, and there are differences in the tax treatment of these plans.  For many retirees, distributions are mandatory after a certain age, and these amounts will need to be reported on Form 1040 as taxable income.  The amounts listed on 1099-R are for inclusion on one’s income tax form, and the form is submitted to the IRS with a copy to the taxpayer.

The reason they are taxable is that most amounts placed in an IRA or retirement plan are deductible from income for that year, and will now be subject to tax upon withdrawal in the current tax year.  There are exceptions such as withdrawals from a qualified Roth IRA, so it is important to get sound tax advice on the tax ability of distributions.

Form 1099-R resembles other 1099 forms on the left hand side with boxes for the payer, recipient, addresses and tax identification numbers.  There is also a space for the recipient’s account number.

On the right hand side the important and most frequently used boxes include

Box 1 contains the Gross Distribution before withholding or taxes, and Box 2 lists the amount that is taxable.  If the distribution was a rollover to another account then this amount would be zero.

Box 4 contains the amount of federal income tax withheld by the payer.

Box 7 lists the distribution code for the type of distribution, such as normal, early, death, disability and Roth payments.  There is also a check box for any distributions that are IRA/SEP or SIMPLE plans.

Boxes 12-17 are for reporting state and local income taxes.

It is important to check the accuracy of the distribution amounts on form 1099-R since they may be taxable for the recipient.

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Categories: 1099 Forms Tags: ,

What is IRS Form 1099-R?

June 7th, 2013 No comments

Form 1099-R is an Internal Revenue Service information report used to payers to report distributions from annuities, IRAs, profit sharing plans, insurance contracts, retirement plans, and pensions to recipients.  Form 1099-R also shows capital gains that are related to these distributions, and it shows any insurance premiums or contributions made to the plan by the plan holder.  Any distribution exceeding $10 is required to be reported by payers on Form 1099-R.  A separate 1099-R form should be prepared for each type of benefit in which a payment was received, and for each recipient of a benefit.  The type of benefit is noted in Box 7 of Form 1099-R.

Form 1099-R is used by the IRS to track these payments to recipients and match income data from the payer and payment recipient.  The 1099-R form may be used by the payment recipient to help complete his or her own tax return, or be sent to a tax preparer for assistance with the preparation.  Form 1099-R should be sent to the payment recipient by January 31 of the year following the calendar year that the payments were sent.  It is due to the IRS along with Form 1096 by February 28.  Instead of paper filing, you can file electronically and have an additional month of time taking the due date to the end of March.  You can also file for a 30-day extension giving you until the end of April to file electronically. Along with the payment recipient, the IRS and the state tax or revenue departments should receive a copy of the completed 1099-R form.

1099-R software at the site 1099fire.com makes it easy to import, print and/or efile IRS Form 1099-R quickly and easily. File unlimited 1099-R’s electronically with the IRS. 1099FIRE software creates files in the format required by the IRS for electronic transmission. The system is updated each year to reflect the format changes that are made by the IRS. 1099FIRE is the only company to offer OneTouch E-Filing. Just click a button and the software will automatically log in and upload your file to the IRS FIRE system. You will receive verification within seconds of receipt of your file.

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About Form 1099-R

December 14th, 2010 No comments

IRS Tax Form 1099-R is filed for distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans and IRAs in the amount of $10 or more. Death benefit payments from employers not part of a pension or profit-sharing plan must also be reported, as do disability payments made from a retirement plan. Wage payments subject to withholding are not reported on the 1099-R. Military Retirement annuities, income tax withholding, distributions of section 404 (k) dividends from an employee stock ownership plan (ESOP), Life Insurance, annuity and endowment contracts, and charitable gift annuities are all examples of transactions to be filed on Form 1099-R. Copies of Form 1099-R must be provided to the income recipients per the general requirements for information returns.

Individual Retirement Arrangement distributions, including Deemed IRAs, Roth IRAs, Traditional, SEP, and Simple IRAs, are all included on Form 1099-R. IRA distributions are subject to 20% withholding and must be reported in box 4. Corrective distribution from an IRA, IRA revocations and account closures, and transfers from simple to non-simple IRAs must be entered in various sections of the form. If a traditional or Roth IRA is closed within the first seven days or revoked in connection with non-satisfaction of the Customer Identification Program requirements, distributions must be reported.

A separate 1099-R form must be filed for a designated Roth IRA. Deductible Voluntary Employee Contributions (DVECs), also require a separate 1099-R to be filed, except in the case of a direct rollover. Direct rollovers, or the direct payment of the distribution from a qualified plan to a traditional IRA, or Roth IRA, can be made for an employee, an employee’s surviving spouse, or a non-spouse designated beneficiary.

Box 1 of Form 1099-R is where the taxpayer enters Gross Distribution, or the total amount of distribution before withholding. Direct Rollovers, IRA rollovers, and premiums paid for insurance protection are all entered here, along with employer securities and other property. Box 2 is where the taxable amount of income reported on Box 1 is entered.

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