Form 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (2018)

What Form 1099-R Is For

Form 1099-R is used to report distributions of $10 or more from retirement accounts and similar sources. If you received money from a pension, 401(k), IRA, annuity, or other retirement plan during 2018, the plan administrator or financial institution was required to send you this form showing how much you received.

The form reports distributions from numerous sources including profit-sharing plans, traditional and Roth IRAs, simplified employee pension (SEP) IRAs, SIMPLE IRAs, section 403(b) plans, governmental section 457(b) plans, life insurance contracts, endowment contracts, charitable gift annuities, and survivor benefit plans. It also reports military retirement pay, disability payments from retirement plans, and death benefits paid to beneficiaries. IRS.gov

The payer (your retirement plan administrator, trustee, or insurance company) files Copy A with the IRS and sends you Copy B for your tax records. The information helps the IRS verify that you're properly reporting retirement income on your tax return. The form includes crucial details like the gross distribution amount, the taxable portion, any federal income tax withheld, and special distribution codes that identify what type of withdrawal you made.

When You’d Use Form 1099-R (Late/Amended Filing)

For Payers (Plan Administrators)

If you're a plan administrator who filed Form 1099-R with the IRS and later discover an error, you must correct it as soon as possible. Corrections are filed using the same Form 1099-R with the "CORRECTED" checkbox marked. To avoid late filing penalties when filing a corrected form after the original deadline, enter an explanatory note in the bottom margin of Form 1096 (the transmittal form). IRS.gov

The standard filing deadline for 2018 Form 1099-R was January 31, 2019 (for paper or electronic submissions to recipients) and February 28, 2019 (paper filing with the IRS) or April 1, 2019 (electronic filing with the IRS). You can request a 30-day extension using Form 8809, but only one extension is available and it must be filed by the original due date. IRS.gov

For Recipients (Taxpayers)

If you receive an incorrect Form 1099-R, first contact the payer immediately to request a corrected form. If you still haven't received the missing or corrected form by the end of February and need to file your tax return, you can estimate the amounts and file using Form 4852 (Substitute for Form W-2 or 1099-R). If you later receive the corrected Form 1099-R and the information differs from what you originally reported, you must file Form 1040-X (Amended U.S. Individual Income Tax Return). IRS.gov

Key Rules or Details for 2018

Important 2018 Changes

The most significant rule change for 2018 was that Roth IRA conversions could no longer be recharacterized (undone). A conversion of a traditional IRA to a Roth IRA made after December 31, 2017, cannot be recharacterized back to a traditional IRA. However, conversions made in 2017 could still be recharacterized through the 2017 tax return deadline (with extensions). IRS.gov

Distribution Thresholds

Payers must file Form 1099-R for any designated distribution of $10 or more. This threshold applies regardless of whether the distribution is taxable. Even tax-free rollovers and trustee-to-trustee transfers that constitute reportable distributions must be reported if they meet the $10 threshold. IRS.gov

New Distribution Codes

Two new distribution codes were added for 2018: Code C (for reportable death benefits under section 6050Y) and Code M (disaster distributions). These codes appear in Box 7 of the form and help identify the specific type of distribution for proper tax treatment. IRS.gov

Direct Rollover Rules

Direct rollovers (where money moves directly from one retirement account to another without you touching it) must be reported on Form 1099-R. For direct rollovers, the gross distribution appears in Box 1, but Box 2a (taxable amount) shows zero, and Code G appears in Box 7. From 2018 onward, direct rollovers from designated Roth accounts could only go to another designated Roth account or to a Roth IRA—not to traditional retirement accounts. IRS.gov

Step-by-Step (High Level)

For Recipients (Understanding Your Form 1099-R)

Step 1: Verify Basic Information

Check that your name, address, and Social Security number are correct in the recipient section. Verify the payer's information matches your records.

Step 2: Review Box 1 (Gross Distribution)

This shows the total amount distributed before taxes or deductions. This includes taxable and nontaxable portions.

Step 3: Identify Taxable Amount (Box 2a)

This is the amount you may need to include as income on your tax return. Sometimes this box is blank with the "Taxable amount not determined" checkbox marked—meaning you need to calculate the taxable portion yourself based on your contributions and basis.

Step 4: Decode Box 7 (Distribution Code)

This is critical for proper tax treatment. Common codes include:

• Code 1: Early distribution (under age 59½) with no known exception
• Code 2: Early distribution with an exception (no 10% penalty)
• Code 4: Death benefit distribution
• Code 7: Normal distribution (age 59½ or older)
• Code G: Direct rollover
• Code J: Roth IRA distribution

Multiple codes may appear together. Understanding these codes helps determine if penalties apply. IRS.gov

Step 5: Check Withholding (Box 4)

Review federal income tax withheld. This amount appears on your tax return as tax already paid, similar to withholding from wages.

Step 6: Report on Tax Return

Enter the Form 1099-R information on the appropriate lines of Form 1040. For 2018, retirement distributions were reported on lines 4a (IRA distributions), 4b (taxable amount), 5a (pensions and annuities), and 5b (taxable amount). If you performed a rollover, you'll need to indicate "rollover" next to the appropriate line.

Common Mistakes and How to Avoid Them

Mistake #1: Not Reporting a Rollover Correctly

Many taxpayers receive a 1099-R for a rollover and panic, thinking they owe taxes on the entire amount. If you completed a valid 60-day rollover or direct rollover, you'll still receive a Form 1099-R showing the distribution, but you report it as a nontaxable rollover on your return. Double-check Box 7 for Code G (direct rollover) or enter "rollover" on your tax return to avoid IRS matching notices.

Mistake #2: Missing the Taxable Amount Calculation

When Box 2b is checked "Taxable amount not determined," you cannot simply copy Box 1 to your tax return. You must calculate your taxable amount based on after-tax contributions (basis) in the account. This commonly occurs with traditional IRA distributions when you made nondeductible contributions. Keep Form 8606 records to track your basis over the years.

Mistake #3: Overlooking the 10% Early Withdrawal Penalty

If you're under age 59½ and Box 7 shows Code 1 (early distribution, no known exception), you likely owe a 10% additional tax on the taxable amount. However, numerous exceptions exist—including disability, first-time home purchase, qualified higher education expenses, and substantially equal periodic payments. If an exception applies but your 1099-R shows Code 1, you may need to file Form 5329 to claim the exception. IRS.gov

Mistake #4: Forgetting About State Taxes

Form 1099-R is a federal form, but most states also tax retirement distributions. Check if your state offers exemptions for certain types of retirement income. Some states don't tax Social Security or pension income, while others provide age-based exemptions.

Mistake #5: Not Keeping Supporting Documentation

Always retain records showing the nature of your distribution—especially for rollovers, Roth conversions, and return-of-contribution transactions. If the IRS questions your return, you'll need proof that you handled the distribution correctly. Keep rollover confirmation letters and account statements showing the receiving account.

Mistake #6: Incorrect Handling of Multiple 1099-R Forms

If you received distributions from multiple sources or had multiple transactions (like a partial rollover), you'll receive separate Forms 1099-R for each. Make sure to report all of them. The IRS computer matching system compares every Form 1099-R against your tax return.

What Happens After You File

For Payers

After filing Forms 1099-R with the IRS, payers should retain copies for at least four years. The IRS processes the forms and matches them against taxpayer returns. If discrepancies arise, the IRS may send correspondence to either the payer or the recipient requesting clarification or correction. Late or incorrect filing can result in penalties ranging from $50 to $280 per form (for 2018 tax year), depending on how late the correction is made. IRS.gov

For Recipients

Once you file your tax return including your Form 1099-R information, the IRS matches your reported amounts against what payers reported. This typically happens months after you file. If there's a mismatch, you may receive:

• CP2000 Notice: This is a proposed change to your tax return based on information the IRS received that differs from what you reported. It's not a bill, but a notice explaining the discrepancy. You have the right to agree, disagree with explanation, or partially agree.
• CP2501 Notice: Similar to CP2000 but issued when the discrepancy doesn't result in additional tax due.

If everything matches correctly, you won't hear anything specifically about your Form 1099-R—it will simply be part of your accepted tax return. Your refund (if you're due one) or tax liability will be processed normally.

For distributions subject to mandatory 20% withholding (like most employer plan distributions paid directly to you instead of rolled over), that withholding appears on your 1099-R and counts as tax payment, just like paycheck withholding. If too much was withheld, you'll get a refund; if too little, you'll owe additional tax when you file.

FAQs

1. What's the difference between Box 1 and Box 2a on Form 1099-R?

Box 1 shows the total gross distribution—everything that came out of your retirement account. Box 2a shows only the taxable portion. The difference typically represents your after-tax contributions (basis) that you already paid tax on, so you don't pay tax again. For example, if you took a $50,000 distribution and had $10,000 of after-tax contributions, Box 1 would show $50,000 and Box 2a would show $40,000. Sometimes Box 2a is blank with "Taxable amount not determined" checked, meaning you need to figure out the taxable portion yourself. IRS.gov

2. Do I owe taxes on a distribution if Code G appears in Box 7?

Code G indicates a direct rollover, which means the money moved directly from one retirement account to another eligible retirement plan. Direct rollovers are not taxable in the year they occur because the money stayed within the retirement system. You still receive a Form 1099-R for reporting purposes, but Box 2a should show zero taxable amount. You must report it on your tax return but indicate it was a rollover. IRS.gov

3. I'm under 59½ and took an IRA distribution for my first home purchase. Will I owe the 10% penalty?

Probably not, if you qualify for the first-time homebuyer exception (up to $10,000 lifetime limit). However, your Form 1099-R may still show Code 1 (early distribution, no known exception) because the payer doesn't always know your situation. You'll need to file Form 5329 with your tax return to claim the exception and avoid the 10% penalty. The distribution is still taxable income—you're just avoiding the additional 10% penalty. IRS.gov

4. What if I disagree with the amount shown on my 1099-R?

Contact your plan administrator or payer immediately. They may need to issue a corrected Form 1099-R. Don't just file your tax return with different numbers hoping the IRS won't notice—this will trigger a matching notice. If you can't get a corrected form and believe yours is wrong, file your return with the correct amounts and attach a statement explaining the discrepancy. Keep documentation supporting your position. IRS.gov

5. I did a Roth conversion in 2018. Is it too late to undo it?

Yes. Starting with 2018 conversions, recharacterizations (undoing a Roth conversion) are no longer allowed. The Tax Cuts and Jobs Act eliminated the ability to recharacterize Roth conversions made after December 31, 2017. You must include the taxable amount of the conversion in your 2018 income. However, you can still recharacterize regular Roth IRA contributions (not conversions) if they were made by mistake. IRS.gov

6. What does it mean if I have multiple distribution codes in Box 7?

Multiple codes provide more complete information about your distribution. For example, you might see "7D" which means "normal distribution" (7) that's a direct rollover but only includes the return of your after-tax contributions (D). Or "4B" might indicate a distribution due to death (4) from a designated Roth account (B). The combination tells both you and the IRS exactly how to treat the distribution for tax purposes. Each code has a specific meaning, and they work together to paint a complete picture. IRS.gov

7. Do I need to keep my Form 1099-R, and if so, for how long?

Yes, keep all Forms 1099-R with your tax records. The IRS generally recommends keeping tax records for at least three years from the date you filed your return, but seven years is safer for documentation related to retirement accounts. You'll especially need these records if you've been tracking basis in traditional IRAs (nondeductible contributions) or if you ever face an IRS inquiry. For Roth IRAs, keep records showing when you opened the account and all contributions to prove your five-year holding period for tax-free qualified distributions.

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