Form 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (2016)

What the Form Is For

Form 1099-R is the tax document that reports money you received from retirement accounts and similar plans during the 2016 tax year. Think of it as a receipt showing what you withdrew from your nest egg—whether that's a pension, 401(k), IRA, annuity, or profit-sharing plan. This form is critical because the IRS needs to know about these distributions to determine how much of that money is taxable.

You'll receive Form 1099-R from the financial institution, employer, or plan administrator that paid you if you received $10 or more during the year. The form includes important information like the total amount distributed (Box 1), how much is taxable (Box 2a), any federal taxes withheld (Box 4), and crucially, a distribution code in Box 7 that tells the IRS what type of withdrawal this was—whether it's a normal retirement distribution, an early withdrawal, a rollover to another retirement account, or something else entirely.

Understanding your 1099-R matters because not all retirement money is created equal for tax purposes. Some distributions might be entirely taxable, some partially taxable (if you made after-tax contributions), and some completely tax-free (like certain Roth IRA withdrawals). The form also helps determine whether you owe additional penalties, such as the 10% early distribution tax if you withdrew money before age 59½ without qualifying for an exception.

When You'd Use It (Late/Amended)

You should receive your Form 1099-R by January 31, 2017 (for the 2016 tax year). If you don't receive it by mid-February, contact your plan administrator immediately. You need this form to complete your federal tax return—specifically lines 16a and 16b of Form 1040, lines 12a and 12b of Form 1040A, or lines 17a and 17b of Form 1040NR.

Corrected Forms

If you receive a corrected Form 1099-R after you've already filed your taxes, pay close attention. A corrected form (marked “CORRECTED” in a checkbox at the top) replaces the original because it contained an error—perhaps the taxable amount was wrong, the distribution code was incorrect, or the withholding amount was misstated.
If the corrected information differs from what you reported and affects your tax liability, you must file Form 1040X (Amended U.S. Individual Income Tax Return) to fix your return.

There's no strict IRS deadline for when plan administrators must issue corrected forms, though they should do so as soon as they discover an error. However, you generally have three years from your original filing date to amend your return and claim a refund if the correction means you overpaid. If the correction means you underpaid, file your amended return as soon as possible to minimize interest and penalties.

Missing or Unavailable Forms

If you never received a 1099-R but know you took a distribution, don't ignore it. Contact your plan administrator to request the form.
If you absolutely cannot obtain it before the filing deadline, you must still report the distribution on your tax return using your best estimate of the amounts, then file an amended return once you receive the actual form.

Key Rules for 2016

Minimum Reporting Threshold

Plans must issue Form 1099-R for any distribution of $10 or more. Even small withdrawals trigger reporting requirements.

Tax Treatment by Distribution Type

The Box 7 distribution codes are essential:

• Code 7: Normal distribution (no penalty)
• Code 1: Early distribution, potentially subject to 10% penalty
• Code 2: Early distribution with a known exception
• Code G: Direct rollover
• Code J: Roth IRA distribution

Multiple codes can appear together for complex transactions.

Expanded Public Safety Employee Exception

New for distributions after December 31, 2015, the early withdrawal penalty exception for qualified public safety employees who separated from service after age 50 was expanded to include:

• Federal law enforcement officers
• Federal customs and border protection officers
• Federal firefighters
• Air traffic controllers
• Nuclear materials couriers
• U.S. Capitol Police
• Supreme Court Police
• Diplomatic security special agents

Designated Roth Account Distributions

If your employer’s plan included a designated Roth account, qualified distributions (after age 59½, death, or disability, and after a 5-year holding period) are completely tax-free.

IRA Conversions

Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs must be reported, even for trustee-to-trustee transfers. The taxable amount is reported in the year of conversion.

Direct Rollovers

When money moves directly between qualified plans or IRAs without you touching it, the distribution is reported with $0 taxable amount and Code G, protecting you from immediate taxation and mandatory withholding.

Step-by-Step Filing (High Level)

Step 1: Verify the Information

Check that your name, SSN, and address are correct. Review Box 1 (gross), Box 2a (taxable amount), and Box 7 (code). Report errors to the payer.

Step 2: Determine the Taxable Amount

If Box 2a shows a number, that’s your taxable amount.
If Box 2b is checked (“Taxable amount not determined”), calculate it yourself—using the Simplified Method for annuities, or other applicable rules for non-qualified plans.

Step 3: Check for Special Situations

Look at Box 7’s distribution code:

• Code 1: May trigger 10% penalty (unless exceptions apply)
• Code G: Should show $0 taxable
• Code J: May be tax-free if qualified Roth distribution

Step 4: Complete Your Tax Return

Enter the gross amount (Box 1) and taxable amount (Box 2a) on Form 1040, 1040A, or 1040NR.
If part is tax-free, report only the taxable portion.

Step 5: Report Withholding

Include federal tax withheld (Box 4) in your total withholding on your tax return.

Step 6: File Additional Forms if Needed

• Form 5329: Early distribution penalty
• Form 4972: Lump-sum distribution with special tax treatment

Common Mistakes and How to Avoid Them

Mistake #1: Ignoring the Distribution Code

Box 7 determines whether penalties apply. Always verify and understand it.

Mistake #2: Reporting the Gross Amount as Taxable

Only report the taxable amount (Box 2a). After-tax contributions are non-taxable returns of principal.

Mistake #3: Forgetting About Rollovers

Code G should show $0 taxable. Contact your plan if this is wrong.

Mistake #4: Missing the 60-Day Rollover Deadline

You have exactly 60 days to complete indirect rollovers. Missing it makes the distribution taxable.

Mistake #5: Not Accounting for 20% Withholding

When distributions are paid to you (not rolled over directly), 20% is withheld. Replace it in your rollover or face tax on it.

Mistake #6: Failing to Track Roth Basis

Track when you first contributed to a Roth IRA. The 5-year clock starts with your first contribution.

Mistake #7: Overlooking State Taxes

Federal withholding appears in Box 4, but state taxes may appear in Boxes 12–13. Check and report accordingly.

What Happens After You File

Once filed, the IRS matches your 1099-R data to what the payer submitted.
If everything aligns, your return processes normally, and:

• Refunds arrive within ~21 days (e-file) or 6–8 weeks (paper).
• Payments are credited if you owed taxes.

If There’s a Mismatch

The IRS issues a CP2000 Notice if data doesn’t match—usually 12–18 months after filing.
You can respond with explanations or documents.

Early Distribution Penalty Assessment

If you owe the 10% penalty and filed Form 5329, the IRS assesses it.
If you didn’t, the IRS will later send a notice adding the penalty.

Rollovers and Roth Reporting

Code G rollovers generally require no further IRS inquiry as long as Form 5498 confirms receipt by the receiving plan.

Amended Returns and Recordkeeping

File Form 1040X for corrections.
Keep all 1099-Rs and returns for at least seven years for audit protection and future basis tracking.

FAQs

1. I received multiple Forms 1099-R. Do I need to report them all?

Yes. Report every form. Each represents a separate distribution. Add the amounts together on your Form 1040.

2. What if I rolled over my distribution—do I still report it?

Yes. Report all rollovers.

• Direct rollovers: Box 2a = $0, Code G
• Indirect rollovers: Must redeposit within 60 days to avoid taxes.

3. I’m 62. Will I owe the 10% early withdrawal penalty?

No. The penalty applies only before age 59½. Your Form 1099-R should show Code 7 (normal distribution).

4. My Box 2b is checked “Taxable amount not determined.” What does that mean?

It means the payer doesn’t know your after-tax basis. You must calculate it—use Form 8606 for IRA distributions.

5. Can I have taxes withheld from my retirement distribution?

Yes. Use Form W-4P to request withholding.
Defaults: 10% for periodic payments, 20% (mandatory) for eligible rollover distributions paid to you.

6. What’s the difference between Code 2 and Code 1 in Box 7?

Both are early distributions (<59½):

• Code 1: May incur the 10% penalty.
• Code 2: Qualifies for a known exception (like separation after 55, disability, or death).

7. I turned 70½ in 2016. Do I need to take an RMD?

Yes. You must take required minimum distributions (RMDs) by April 1 of the year after you turn 70½.
Failing to do so can trigger a 50% penalty on the missed amount.

Sources

• IRS Form 1099-R (2016)
• 2016 Instructions for Forms 1099-R and 5498
• Publication 575: Pension and Annuity Income (2016)

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