What Is Form 1099-R and Why Did I Receive One?

Form 1099-R, “Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.,” is an information return required by the Internal Revenue Service (IRS). Financial institutions issue this form to individuals who have received a distribution of $10 or more from any of these accounts. Its purpose is to report the total amount of the distribution to both the recipient and the IRS. Receiving this form indicates a financial event has occurred that must be properly reported on your annual income tax return, regardless of whether the funds are ultimately taxable.

Reasons for Receiving a Form 1099-R

You will receive a Form 1099-R if you have taken money out of a retirement account. This includes standard distributions after reaching retirement age of 59 ½ from plans like a 401(k) or a traditional IRA.

The form is also generated for other transactions, such as an early distribution before age 59 ½. Another frequent trigger is a rollover, where you move funds from one retirement account to another, like from a 401(k) into an IRA. While rollovers are not taxable events, they are still reportable distributions.

Other situations also require a Form 1099-R. Failing to repay a 401(k) loan can result in the balance being treated as a taxable distribution. If you are the beneficiary of an inherited retirement account and take a distribution, you will receive a 1099-R. Disability payments from a retirement plan or distributions from a life insurance policy also trigger this form.

Decoding Form 1099-R Box by Box

Box 1 Gross distribution

This box shows the total amount distributed from the retirement account before any tax withholdings. It represents the full value of the transaction, whether it was a direct payment, a rollover, or a defaulted loan. This figure is the starting point for reporting the transaction on your tax return.

Box 2a Taxable amount

This box shows the portion of the gross distribution considered taxable income. For distributions from traditional IRAs or 401(k)s funded with pre-tax dollars, this amount is often the same as Box 1. If you made after-tax contributions to your plan, the taxable amount may be less than the gross distribution, as the return of your after-tax money is not taxed.

Box 2b Taxable amount not determined

If this box is checked, the payer could not determine the taxable portion of your distribution, and you are responsible for the calculation. This is common for traditional IRAs with both deductible and non-deductible contributions. You would need to use IRS Form 8606 to determine the tax-free portion of your distribution.

Box 4 Federal income tax withheld

This box displays the total federal income tax withheld from your distribution by the payer. This money has been sent to the IRS on your behalf. When you file your tax return, this amount is credited toward your total tax liability for the year.

Box 7 Distribution code(s)

Box 7 contains codes that tell the IRS the nature of your distribution. For instance, Code 7 indicates a normal distribution for a person over age 59 ½, which is taxable but not subject to an early withdrawal penalty. Code 1 signifies an early distribution, where the taxable portion may be subject to an additional 10% tax unless an exception applies.

If an exception to the early withdrawal penalty applies, you might see Code 2. Code 4 is used for death benefit distributions to a beneficiary. A Code G indicates a direct rollover to another retirement plan, like an IRA or 401(k). This transaction is not taxable but must still be reported.

Box 14 State tax withheld

This box shows the amount of state income tax withheld from your distribution. Similar to federal withholding, this amount is a pre-payment of your state tax liability. The rules for taxation of retirement distributions vary by state.

Reporting Form 1099-R Information on Your Tax Return

Transfer the information from Form 1099-R to your Form 1040 tax return. Report IRA distributions on Lines 4a and 4b for the gross and taxable amounts, respectively. Report distributions from pensions, annuities, and 401(k)s on Lines 5a and 5b.

For a direct rollover (Code G), report the total distribution on line 4a or 5a, but enter $0 as the taxable amount on line 4b or 5b. Write “ROLLOVER” next to the line to show the funds were moved to another retirement account.

If your form shows an early distribution (Code 1), you may need to file Form 5329, “Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts.” This form calculates the 10% additional tax on early withdrawals. Use it to pay the penalty or claim an exemption if you qualify.

If you receive a “CORRECTED” Form 1099-R, use the new information to file your taxes. If you already filed with the original form, you must file an amended return using Form 1040-X, “Amended U.S. Individual Income Tax Return,” to report the correct information.