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. 

Will I receive Form 1099-R?  

You will receive Form 1099-R if you received distribution of $10 or more 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  

Most payments you receive from a retirement plan or IRA can be “rolled over” to another retirement plan or IRA within 60 days. You can also have your financial institution directly transfer the payment to another plan or IRA. You do not typically have to pay taxes on rollovers.

Funds distributed directly to you are generally subject to 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 is considered a distribution, which you will have to report at tax time.

Early distributions  

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

There are a few exceptions that allow for penalty-free withdrawals, such as: 

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

Keep in mind – penalty-free does not mean tax-free altogether. These exceptions only pertain to the additional 10% penalty mentioned above.

Many Americans borrowed money from their retirement accounts for the first time during the COVID-19 pandemic. Coronavirus Related Distributions should have been reported as income via Form 1099-R as early distributions under provisions of the CARES act.

The CARES Act allowed taxpayers to report Coronavirus Related Distributions over the course of 3 years instead of all at once.

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

This article was last updated on 4/27/2022.

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