Form 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (2020)
What the Form Is For
Form 1099-R is an informational tax document used to report distributions (withdrawals or payments) of $10 or more from various retirement accounts and similar plans. If you withdrew money from your 401(k), IRA, pension, annuity, or similar retirement account during 2020, your plan administrator or financial institution was required to send you this form.
The form reports several critical pieces of information: the total amount distributed to you (Box 1), the taxable portion of that distribution (Box 2a), any federal income tax already withheld (Box 4), and importantly, a distribution code in Box 7 that tells the IRS—and you—the nature of the distribution. This code determines whether you owe additional taxes, early withdrawal penalties, or qualify for special tax treatment.
Think of Form 1099-R as your retirement account's "receipt" that both you and the IRS receive. You'll use this information when filing your Form 1040 tax return to accurately report retirement income. The IRS matches the information on your 1099-R against what you report on your return, so discrepancies can trigger notices or audits. IRS.gov
When You’d Use Form 1099-R
Late/Amended
You should receive your Form 1099-R by January 31 following the year of distribution. For 2020 distributions, you would have received the form by January 31, 2021. If you didn't receive your form by early February, first contact your plan administrator or financial institution directly to request a copy.
If you still haven't received your 1099-R by the end of February, call the IRS at 800-829-1040 for assistance. However, don't wait to file your tax return if you have all the necessary information—you can file using your records if needed. IRS Topic 154
If Your Form 1099-R Is Incorrect: Contact your plan administrator immediately to request a corrected form. They should issue a corrected Form 1099-R with the "CORRECTED" box checked. Common errors include wrong distribution amounts, incorrect taxable amounts, or improper distribution codes. If your plan administrator refuses to issue a correction and you believe the form is wrong, you can file Form 4852 (Substitute for Form W-2 or 1099-R) with your tax return, explaining the discrepancy.
Amended Returns: If you've already filed your 2020 tax return but later discover errors related to your 1099-R—such as receiving a corrected form or realizing you reported the wrong amount—you'll need to file Form 1040-X (Amended U.S. Individual Income Tax Return). You generally have three years from the original filing deadline to amend your return. IRS Topic 154
Key Rules or Details for 2020
The 2020 tax year saw several significant changes affecting Form 1099-R due to the SECURE Act of 2019 and the CARES Act responding to the COVID-19 pandemic:
Required Minimum Distribution (RMD) Changes
The SECURE Act raised the age for starting required minimum distributions from 70½ to 72 for individuals who turned 70½ after December 31, 2019. Additionally, the CARES Act temporarily waived all RMDs for 2020, meaning you weren't required to take your usual RMD from IRAs and most retirement plans for that year. IRS Coronavirus Relief
Coronavirus-Related Distributions (CRDs)
The CARES Act created special tax treatment for distributions up to $100,000 taken in 2020 by individuals affected by COVID-19. These "qualified individuals" could withdraw from retirement accounts without paying the 10% early withdrawal penalty. Additionally, the taxable amount could be spread over three years (2020, 2021, 2022) instead of being fully taxable in 2020, and amounts withdrawn could be repaid to eligible retirement plans within three years without counting against contribution limits. IRS Coronavirus Relief
Qualified Birth or Adoption Distributions
New for 2020, the SECURE Act allowed penalty-free distributions of up to $5,000 for qualified births or adoptions occurring after December 31, 2019. These distributions avoid the 10% early withdrawal penalty but are still taxable, and can be repaid within three years. A new code "BA" was added for reporting repayments. IRS 2020 Instructions
Distribution Code Requirements
Box 7 of Form 1099-R contains one or more distribution codes that are critical for proper tax treatment. For 2020, payers were instructed to use specific codes for coronavirus-related distributions, though reporting varied. Understanding these codes is essential because they determine whether you owe early withdrawal penalties or qualify for special treatment.
Step-by-Step (High Level)
Step 1: Receive and Review Your Form 1099-R
By January 31, 2021, you should have received Form 1099-R from every financial institution or plan administrator from which you took a distribution in 2020. Carefully review each form to ensure the amounts match your records and that the distribution code in Box 7 accurately reflects the nature of your withdrawal.
Step 2: Understand the Key Boxes
- Box 1 (Gross Distribution): The total amount distributed, including any taxes withheld
- Box 2a (Taxable Amount): The portion subject to income tax. Sometimes this is blank with "Taxable amount not determined" checked, meaning you must calculate it
- Box 4 (Federal Income Tax Withheld): Taxes already taken out—this goes on your Form 1040
- Box 7 (Distribution Code): Crucial code(s) indicating the type and tax treatment of your distribution
- Box 5 (Employee Contributions): Your after-tax contributions returned to you (not taxable)
Step 3: Determine Taxability
Not all distributions are fully taxable. If you made after-tax contributions to a traditional IRA or retirement plan, part of your distribution represents a return of those contributions and isn't taxable. For Roth IRA distributions, qualified distributions are entirely tax-free. Review IRS Publication 575 (Pension and Annuity Income) to calculate your taxable amount if Box 2a is blank.
Step 4: Check for Penalties
If you're under age 59½ and don't qualify for an exception, you'll generally owe a 10% early withdrawal penalty on the taxable portion. However, numerous exceptions exist—including disability, qualified medical expenses, substantially equal periodic payments, coronavirus-related distributions, and qualified birth/adoption distributions. The distribution code in Box 7 often indicates whether an exception applies.
Step 5: Report on Your Tax Return
For 2020 returns, IRA distributions are reported on Line 4a and 4b of Form 1040, while pensions and annuities go on Line 5a and 5b. Enter the gross amount on the "a" line and the taxable amount on the "b" line. If you owe the 10% early withdrawal penalty, you'll calculate it on Form 5329 (Additional Taxes on Qualified Plans).
Step 6: Special Reporting for 2020 Provisions
If you took a coronavirus-related distribution or qualified birth/adoption distribution, you may need to file Form 8915-E (Qualified 2020 Disaster Retirement Plan Distributions and Repayments) to spread income over three years or report repayments.
Common Mistakes and How to Avoid Them
Mistake 1: Reporting the Entire Distribution as Taxable
Many taxpayers incorrectly report the full amount from Box 1 as taxable income, even when they made after-tax contributions. If Box 2a is blank and "Taxable amount not determined" is checked, you must calculate the tax-free portion yourself using the Simplified Method worksheet or consulting IRS Publication 590-B (for IRAs) or Publication 575 (for pensions).
How to Avoid: Keep records of all after-tax contributions to your retirement accounts. For traditional IRAs with non-deductible contributions, file Form 8606 each year to track your basis.
Mistake 2: Ignoring or Misinterpreting Distribution Codes
The codes in Box 7 directly affect your tax liability. For example, Code 1 indicates an early distribution with no known exception (triggering the 10% penalty), while Code 2 indicates an early distribution with an exception (no penalty). Using the wrong code or ignoring it entirely can result in paying penalties you don't owe or failing to pay penalties you do owe.
How to Avoid: Carefully review the distribution codes table in the Form 1099-R instructions. If your form shows Code 1 but you believe you qualify for an exception (such as medical expenses or disability), verify with your plan administrator or claim the exception on Form 5329.
Mistake 3: Reporting Direct Rollovers as Taxable Income
If you rolled over your distribution directly from one retirement account to another (shown by Code G in Box 7), this is not a taxable event. However, some taxpayers mistakenly include these amounts in their taxable income.
How to Avoid: Look for Code G in Box 7 and zero in Box 2a. These direct rollovers should be reported on your Form 1040 to match IRS records, but the taxable amount should be zero or significantly reduced.
Mistake 4: Not Claiming Special 2020 Benefits
Many taxpayers who took coronavirus-related distributions failed to claim the favorable tax treatment—such as spreading income over three years or avoiding the early withdrawal penalty. Similarly, those who took qualified birth/adoption distributions may have unnecessarily paid the 10% penalty.
How to Avoid: Review whether your 2020 distributions qualify for special treatment. If you were affected by COVID-19 and your distribution qualifies, file or amend with Form 8915-E to take advantage of income spreading or penalty relief.
Mistake 5: Missing the Corrected Form Deadline
If you file your tax return early using an incorrect 1099-R and later receive a corrected form, you must file an amended return (Form 1040-X) to correct the mistake. Some taxpayers ignore corrected forms, leading to IRS notices and potential penalties.
How to Avoid: Wait until mid-February to file if you took retirement distributions, allowing time for any corrections. If you receive a corrected form after filing, amend promptly.
Mistake 6: Not Coordinating Multiple Forms
If you received multiple 1099-R forms (from different accounts) or if distributions should have been split across multiple forms with different codes, you must accurately report all of them. Combining them incorrectly can trigger penalties or missed exceptions.
How to Avoid: Report each Form 1099-R separately on your tax return, tracking the amounts and codes individually before totaling them on your Form 1040.
What Happens After You File
IRS Matching Process
After you file your 2020 tax return, the IRS will match the income and withholding you reported against the Forms 1099-R that financial institutions filed with them. This automated matching process typically occurs several months after the filing deadline. If there's a discrepancy—such as you reported a different amount than appears on your 1099-R—the IRS will send you a notice (typically a CP2000 or similar).
If There's a Discrepancy
The IRS notice will propose changes to your tax return and may include additional taxes, penalties, and interest. You have the right to respond, providing documentation that explains the discrepancy. Common legitimate reasons include having non-deductible IRA contributions (basis) that reduced your taxable amount, or qualifying for an exception to early withdrawal penalties. You'll typically have 30 days to respond to the notice.
Processing Coronavirus-Related Elections
If you elected to spread coronavirus-related distributions over three years, you would have reported one-third of the taxable amount on your 2020 return (using Form 8915-E), with the remaining amounts reported on your 2021 and 2022 returns. The IRS will track this multi-year reporting. If you repay the distribution within three years, you can claim a refund for taxes already paid on the repaid amounts by filing amended returns.
Early Withdrawal Penalties
If you owe the 10% additional tax on early distributions, this will increase your overall tax liability for 2020. This penalty is in addition to regular income tax on the distribution. The penalty is calculated on Form 5329 and carried to your Form 1040. It's part of your total tax due and affects whether you owe additional tax or receive a refund.
State Tax Implications
While Form 1099-R is a federal form, most states also tax retirement distributions. Your state may have different rules about what's taxable, so check your state's tax authority website. Some states don't tax Social Security or certain pension income, while others follow federal treatment.
Future Tax Planning
The distributions you took in 2020 may affect your future required minimum distributions (once you reach age 72) and can impact your overall retirement planning. Large distributions can push you into higher tax brackets and affect other income-based calculations, such as Medicare premiums or the taxable portion of Social Security benefits in subsequent years.
FAQs
Q1: Do I have to report my 1099-R on my tax return even if no taxes were withheld?
Yes, absolutely. Even if Box 4 (federal income tax withheld) shows zero, you must report all distributions on your tax return. The IRS receives a copy of your Form 1099-R and will match it against your return. Failing to report it will likely result in a CP2000 notice proposing that you owe additional taxes and penalties. The amount distributed is generally taxable income regardless of whether taxes were withheld at the time of distribution.
Q2: My Form 1099-R shows my Roth IRA distribution as $10,000 in Box 1, but Box 2a is blank. Do I owe taxes?
Not necessarily. For Roth IRA distributions, the payer typically leaves Box 2a blank and checks "Taxable amount not determined" because they don't know your contribution history or whether the distribution qualifies as tax-free. You must determine the taxable amount yourself using Form 8606. If you're over 59½ and the Roth IRA has been open for at least five years, the entire distribution is usually tax-free. If you're younger or the account is newer, earnings may be taxable and potentially subject to the 10% penalty. IRS Publication 590-B
Q3: I took a $50,000 distribution in 2020 due to COVID-19. Can I still benefit from the special coronavirus-related distribution rules in 2025?
If you qualified for coronavirus-related distribution treatment and reported it properly on your 2020 tax return using Form 8915-E, you would have spread the income over 2020, 2021, and 2022. You had until the 2023 filing deadline (generally April 15, 2024, with extensions) to repay the distribution and claim refunds for taxes paid. If you didn't file Form 8915-E with your original 2020 return and haven't yet amended it, you can still file an amended return (Form 1040-X) for 2020, but you're limited to the three-year statute of limitations (generally April 15, 2024, for a 2020 return filed on time). If this deadline has passed, unfortunately, you may have lost the ability to claim the favorable tax treatment. IRS Coronavirus Relief FAQs
Q4: What's the difference between a direct rollover (Code G) and a regular distribution that I rolled over myself?
A direct rollover (Code G) means the money went directly from one retirement account to another without you ever receiving a check—this is also called a trustee-to-trustee transfer. This is the simplest option: it's reported on Form 1099-R but is typically not taxable, and no taxes are withheld. If you receive a distribution check made out to you and then deposit it into another retirement account within 60 days (an indirect rollover), the original distribution will have 20% withheld for taxes, you must roll over the full amount (including making up the 20% from other funds), and you'll need to claim the withheld amount as a credit on your tax return. Direct rollovers are almost always preferable due to their simplicity and automatic tax treatment.
Q5: My distribution code in Box 7 is "1" (early distribution, no known exception), but I believe I qualify for an exception due to disability. What should I do?
First, verify that you meet the IRS definition of disabled for this exception. If you do qualify, you'll need to claim the exception yourself on Form 5329 by entering the distribution amount on line 1 and the qualified exception amount on line 2, which will reduce or eliminate the 10% penalty. You may want to contact your plan administrator to request a corrected 1099-R with Code 3 (disability exception), but you're not required to do so—you can simply claim the exception on your tax return. Keep documentation of your disability in case the IRS questions the exception. IRS Topic 558
Q6: I received multiple Forms 1099-R from the same institution with different distribution codes. Do I report them separately or combine them?
Report them separately on your tax return, tracking each form's amounts individually. Different distribution codes indicate different types of distributions that may receive different tax treatment. For example, one form might show a qualified distribution (Code 7, no penalty) while another shows an early distribution (Code 1, potentially subject to 10% penalty). When entering your information in tax software, add each 1099-R as a separate entry. The software will properly calculate the tax treatment for each and then total them on your Form 1040. Combining them could result in incorrect penalty calculations or missed exceptions.
Q7: Can I refuse a Required Minimum Distribution if I don't need the money?
No, once you reach the required age (72 for those turning 70½ after December 31, 2019), you must take your RMD each year or face a severe penalty—historically 50% of the amount you should have withdrawn, though recent legislation reduced this to 25% or 10% in some cases. However, 2020 was an exception: the CARES Act waived RMDs for that year, so no one was required to take an RMD from IRAs or most retirement plans in 2020. If you took a distribution in 2020 thinking it was your RMD, you could have rolled it back into your retirement account within 60 days or by August 31, 2020, under special relief provisions. For years other than 2020, you cannot avoid RMDs, but you can minimize the tax impact through strategic planning, such as qualified charitable distributions if you're 70½ or older. IRS Coronavirus Relief
Additional Resources
- IRS Form 1099-R and Instructions
- IRS Publication 575: Pension and Annuity Income
- IRS Publication 590-B: Distributions from IRAs
- IRS Topic 558: Early Distributions and Exceptions
- IRS Coronavirus-Related Retirement Plan Relief
This summary is for educational purposes and represents the rules as they applied to the 2020 tax year. Tax laws change frequently, so consult the current year's instructions or a tax professional for your specific situation.
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