Form 1099-R Checklist - (2020) Tax Year
Purpose and Scope
Form 1099-R reports 2020 distributions from pensions, annuities, IRAs, qualified plans, section 403(b) plans, and governmental section 457(b) plans to recipients and the Internal Revenue Service. Recipients who reached age 72 by December 31, 2020, normally must take required minimum distributions, though the Coronavirus Aid, Relief, and Economic Security Act suspended these requirements for the entire 2020 calendar year.
Individuals born before January 2, 1936, may qualify for the 10-year tax option on lump-sum distributions by filing Form 4972 with their tax return. The CARES Act suspended RMDs for 2020, but payers must still report all distributions that recipients actually took during the year on Form 1099-R with the appropriate distribution codes.
Distribution Reporting Requirements
Basic Distribution Reporting
You must report gross distribution in Box 1 by entering the total 2020 payment amount, including direct rollovers, conversions to Roth IRAs, recharacterizations, or periodic and nonperiodic payments. Do not reduce the amount for withholding or basis recovery when calculating the gross distribution.
Payers must determine the taxable amount for Box 2a or check Box 2b using the simplified method for qualified plans and section 403(b) plans with annuity start dates after 1997 when the payer did not compute the taxable amount. For IRAs, SEP, and SIMPLE plans, payers are not required to compute the taxable amount, and recipients must determine it using Form 8606 or applicable worksheets from Form 1040 or 1040-SR instructions.
Federal Income Tax Withholding
Enter all federal income tax withheld during 2020 in Box 4 on Form 1099-R. Recipients must attach Copy B to their tax return and report the withheld amount as a tax credit when Box 4 contains any amount other than zero to receive proper credit for taxes already paid.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Required Minimum Distribution Age Requirements
The SECURE Act increased the RMD age from 70½ to 72 for taxpayers turning 70½ after December 31, 2019. Recipients age 72 by December 31, 2020, are subject to RMD rules reflecting the Setting Every Community Up for Retirement Enhancement Act effective date.
Those who turned 70½ in 2019 remain subject to the previous age 70½ rule and must take their 2019 RMD by April 1, 2020. The CARES Act suspended 2020 RMDs regardless of age, but recipients who voluntarily took distributions must still report them on Form 1099-R with appropriate distribution codes.
Distribution Code Selection and Special Reporting
Standard Distribution Codes
Select the appropriate distribution code in Box 7 to reflect the 2020 distribution type and tax treatment. Code 1 indicates early distribution with no exception for recipients typically under age 59½, while Code 2 indicates early distribution when an exception applies.
Code 3 reports disability distributions, and Code 4 reports death benefit distributions to beneficiaries. Code 7 reports normal distributions for recipients who meet age and service requirements without penalties or special tax treatment.
Special Account and Rollover Codes
Code B designates distributions from designated Roth accounts under employer-sponsored retirement plans. Code G reports direct rollovers to eligible retirement plans, while Code H identifies direct rollovers of designated Roth account funds to Roth IRAs.
Code J reports early Roth IRA distributions without exception that may be subject to tax and penalties. Code Q reports qualified Roth IRA distributions meeting all tax-free requirements, including age and holding period rules.
Recharacterization and Early Distribution Codes
Code N reports recharacterized IRA contributions made for 2020 and recharacterized in 2020, while Code R reports recharacterized IRA contributions made for 2019 and recharacterized in 2020. Code S identifies early SIMPLE IRA distributions occurring within the first two years of participation when no exception applies, and the higher penalty rate may apply.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Mark the IRA/SEP/SIMPLE checkbox when the distribution originates from a traditional IRA, SEP, or SIMPLE plan. Payers must use these codes accurately to ensure recipients receive proper tax treatment on their returns.
Coronavirus-Related Distribution Reporting
For coronavirus-related distributions in 2020, payers may use distribution code 2 for early distribution with an exception that applies, or code 1 for early distribution with no known exception in Box 7. Payers must report all coronavirus-related distributions on Form 1099-R even when recipients recontribute the distribution to the same eligible retirement plan in the same year.
Recipients receive favorable tax treatment, including exemption from the 10% early distribution penalty and the option to include distributions in income ratably over three years. Qualified individuals must use Form 8915-E to report coronavirus-related distributions and any recontributions made during the taxable year.
Capital Gain and Net Unrealized Appreciation
Report capital gain in Box 3 when applicable for lump-sum distributions from qualified plans that include employer securities. Recipients born before January 2, 1936, or recipients of such persons, may qualify for Form 4972 capital gain treatment based on net unrealized appreciation.
Show net unrealized appreciation in Box 6 for lump-sum distributions that include employer company securities by reporting appreciation that occurred while assets remained in trust. The IRS taxes NUA only upon the sale of securities unless recipients elect to include the amount in their 2020 gross income.
Designated Roth Account Basis
Report employee contributions or designated Roth basis in Box 5 to document after-tax amounts. For designated Roth accounts, show the recipient's basis consisting of after-tax contributions or investment in contract recovered tax-free, and for life annuities from qualified or section 403(b) plans with after-tax contributions, show the employee's total investment in contract.
For life annuities from qualified or section 403(b) plans with after-tax contributions, show the employee's total investment in the contract used to compute the taxable portion. Enter the first year the recipient made a contribution to the designated Roth account in Box 11 when Box 5 shows basis in a designated Roth account using either a two-digit or four-digit year format per payer system requirements.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Reportable Death Benefits Under Section 6050Y
Enter the payment date in Box 13 for reportable death benefits. Section 6050Y requires reporting of death benefits paid after December 31, 2018, in connection with life insurance contracts transferred after December 31, 2018, in reportable policy sales.
Use Code C in Box 7 to identify these distributions. Recipients must report partially taxable death benefits using the appropriate tax forms and may need to provide additional documentation.
FATCA Compliance
Check the box in Box 12 when the payer reports to satisfy account reporting requirements under the Foreign Account Tax Compliance Act. Recipients may have separate Form 8938 filing obligations and should consult Form 8938 instructions for specific requirements.
State and Local Tax Reporting
Report state and local tax withheld in Boxes 14 through 19 when applicable to your distribution. Enter state income tax withheld in Box 14, the state or payer state number in Box 15, and the state distribution amount subject to tax in Box 16.
Enter local income tax withheld in Box 17, the locality name in Box 18, and the local distribution amount subject to tax in Box 19. Payers must complete all applicable boxes to ensure accurate state and local tax reporting for recipients.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
