Form 1099-R (2013) Recipient Checklist
Purpose of This Form
Form 1099-R reports distributions from pensions, annuities, individual retirement arrangements, simplified employee pensions, savings incentive match plans for employees, section 457 plans, and insurance contracts. Recipients must identify distributions subject to the simplified method when the annuity starting date falls after 1997.
You must determine taxable amounts for traditional IRA, SEP, and SIMPLE distributions when the payer leaves box 2a blank. Report all distribution code letters on Form 1040 or 1040A, including the new Code D that identifies nonqualified annuity distributions potentially subject to the Net Investment Income Tax under section 1411.
Verification Steps for Recipients
Step 1: Confirm Identification Numbers
Verify the payer's federal identification number appears correctly on the form, along with your own identification number. The form may display only the last four digits of your Social Security number, individual taxpayer identification number, or adoption taxpayer identification number for security purposes.
The payer reports your complete identification number to the Internal Revenue Service and to applicable state or local tax authorities. You must protect your identification number from unauthorized exposure and verify that the truncated digits match your records.
Step 2: Review Gross Distribution Amount
Locate box 1, which shows the gross distribution amount, and report the full amount on Form 1040 or 1040A on the appropriate line for individual retirement arrangement distributions or pensions and annuities. Taxpayers born before January 1, 1936, or beneficiaries of such individuals, should reference Form 4972 to determine eligibility for the 10-year tax option on lump-sum distributions.
Step 3: Determine Taxable Amount
Check box 2a to locate the taxable amount of your distribution. The payer may leave this box blank when unable to determine the taxable portion of the distribution. When box 2a remains blank, and the first box in 2b shows a check mark, you must compute the taxable amount yourself using appropriate tax guidance. Traditional IRA, SEP, and SIMPLE IRA recipients should consult Publication 590 for detailed computation instructions, while Roth IRA recipients must use Form 8606 to calculate any taxable portion of their distribution.
Step 4: Confirm Required Minimum Distributions
Recipients who reach age 70½ or older must verify they have taken required minimum distributions from traditional individual retirement arrangements, simplified employee pensions, and savings incentive match plans for employees. Original Roth IRA owners face no required minimum distribution obligations during their lifetime under the 2013 tax rules.
Failure to withdraw the required minimum amount from applicable retirement accounts triggers a 50% excise tax on the distribution shortfall. Publication 590 provides detailed information about required minimum distribution calculations, distribution deadlines, and specific requirements for different types of retirement accounts.
Step 5: Examine Capital Gain Reporting
Review box 3 for any capital gain amounts included in the distribution from your qualified retirement plan. Recipients born before January 1, 1936, who receive a total distribution from a qualified plan and qualify for lump-sum treatment, report the capital gain portion on Form 4972 rather than Schedule D.
The special tax treatment provides favorable taxation options that apply only to individuals meeting the birth date requirement or beneficiaries of such individuals. This grandfathered tax benefit remains available for eligible taxpayers who receive qualifying lump-sum distributions during the tax year.
Step 6: Document Federal Tax Withholding
Check box 4 for federal income tax withheld from the distribution, and when this box shows any amount, attach Copy B to your tax return and include the withheld amount as tax paid.
Recipients expecting future payments can modify withholding amounts by submitting Form W-4P to the payer or plan administrator.
Understanding Distribution Components
Employee Contributions and Roth Basis
Box 5 displays employee contributions, designated Roth basis, or insurance premiums. This amount represents your nontaxable recovery of after-tax contributions.
Box 11 indicates the first year you made contributions to a designated Roth account, if applicable. The five-year holding period for qualified Roth distributions begins with this first contribution year.
Net Unrealized Appreciation in Employer Securities
Box 6 shows net unrealized appreciation in employer securities distributed from your qualified retirement plan. Recipients of lump-sum distributions may defer taxation on net unrealized appreciation until they sell the securities, or you may elect to include the appreciation in current-year income if preferred.
Distributions that do not qualify as lump-sum payments show net unrealized appreciation attributable to employee contributions, which remains untaxed until you sell the securities. Publication 575 provides comprehensive guidance on net unrealized appreciation taxation rules and reporting requirements.
Distribution Codes and Special Situations
- Box 7 contains distribution codes that identify the type of distribution received. Code N applies to IRA contributions made in 2013 and recharacterized in 2013.
- Code P identifies excess contributions or deferrals taxable in 2012. Code R applies to contributions made for 2012 but recharacterized in 2013.
- Code B designates Roth account distributions and may require Form 5329 when box 10 shows an amount. Code D identifies nonqualified annuity distributions possibly subject to Net Investment Income Tax under section 1411.
Rollover and Loan Treatment
Direct Rollover Distributions
Code G in box 7 indicates a direct rollover to a qualified plan, section 403(b) plan, governmental section 457(b) plan, or individual retirement arrangement, and Code H designates a direct rollover from a designated Roth account to a Roth IRA. Recipients must report zero on the taxable amount line of their tax return for direct rollover distributions because the rollover moves retirement funds without creating a taxable event.
Loans Treated as Distributions
Code L in box 7 signals that a loan from your retirement plan qualifies as a distribution. You must include all or part of the borrowed amount in income unless an exception applies.
Publication 575 explains loan distribution rules and available exceptions. Plan loan failures may qualify for special reporting treatment under the Employee Plans Compliance Resolution System.
Filing Requirements and Documentation
Attach Copy B to your federal tax return when box 4 shows federal income tax withheld. File state or local Copy 2 with your state, city, or local income tax return as required by your jurisdiction. Retain Copy C for your personal records. The IRS receives Copy A directly from the payer.
Key Updates for Tax Year 2013
The Internal Revenue Service added Code D for nonqualified annuity distributions potentially subject to Net Investment Income Tax under section 1411, effective for the 2013 tax year.
Recharacterization codes received refinement to clarify year-of-contribution treatment, with Code N applying to same-year contributions and recharacterizations and Code R applying to prior-year contributions recharacterized in the current year.
Box 11 now shows the first year of designated Roth account contributions, and the Internal Revenue Service requires this year-tracking information for determining Roth distribution eligibility and five-year holding period compliance. Payers must identify tax-free section 1035 exchanges using Code 6 and qualified long-term care insurance transactions using Code W, though recipients need not report these exchanges on their returns.
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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.
