Tax Tip: IRS Form 1099-R

Tax Tip: IRS Form 1099-R is used to report distributions that occur from IRAs , qualified employer plans  , 403(b) accounts and Governmental 457(b) plans during the previous year. For instance, the 1099-R that must be issued by January 31, 2012 should include distributions that occurred during the 2011 calendar year. Form 1099-R is also issued to the IRS, so that they can compare the information with that which is reported on your tax return. 

If the information reported on a Form 1099-R is incorrect, the issuer should be contacted immediately, so that any required corrections can be made.

Form 1099-R is not required to be filed with your tax return unless it shows amounts being withheld for income tax. However, it should be provided to your tax-return-preparer, as it may contain other information which is required to be reported on your tax return.

A common misconception is that Form 1099-R should not be filed for distributions that are rolled over. If the distribution is timely and properly rolled over, the amount is still reported in your tax-return, however, it is reported as a nontaxable transaction. If the distribution was processed as a direct rollover, the payer is also required to indicate that the amount is nontaxable, because it was processed as a direct rollover. This is accomplished by inputting Code G' in Box 7 of the Form 1099-R, and entering 0 (zero) in Box 2a.

Tip provided by Appleby Retirement Consulting Inc. Appleby Retirement Consulting Inc provides Consulting, Coaching and Content on IRAs and other retirement plans to Financial, Tax and Legal professionals.