Form 1099-R (2022) Checklist
Purpose
Form 1099-R reports distributions from retirement plans, IRAs, annuities, and insurance contracts. For 2022, recipients must report distributions under the updated Tax Cuts and Jobs Act (TCJA) rules, which affect rollover treatment and designated Roth account reporting requirements.
For 2022, individuals who turned age 72 in 2022 or earlier were required to take minimum required distributions from traditional IRAs and applicable plans. Individuals who turned 72 in 2022 must take their first RMD by April 1, 2023. Failure to distribute the required minimum subjects the recipient to a 50% excise tax on the undistributed amount for 2022. Note that the SECURE Act 2.0, passed in December 2022, reduced this penalty to 25% (or 10% if timely corrected within two years), effective for failures occurring in 2023 and later, and raised the RMD age to 73 for individuals turning 72 after December 31, 2022.
Recipients born before January 2, 1936, may qualify for the Form 4972 ten-year tax option and preferential capital gains treatment on lump-sum qualified plan distributions.
Completion Steps
1. Verify Recipient Age and RMD Status
If the recipient turned age 72 in 2022 or earlier, confirm Box 1 includes any required minimum distribution from a traditional IRA or applicable plan. IRS instructions require payers to identify this status. For 2022, failure to distribute the full RMD amount subjects the recipient to a 50% excise tax on the amount that was not distributed. Use Publication 590-B to calculate RMD if not already taken. Check Box 7 for the distribution code; code 7 typically indicates a normal distribution for individuals age 59½ or older.
2. Confirm Distribution Code in Box 7
Identify the correct code for 2022 distributions:
- Code N: Recharacterized IRA contribution made FOR 2022 and recharacterized IN 2022 to another type of IRA
- Code R: Recharacterized IRA contribution made FOR 2021 and recharacterized IN 2022 to a different kind of IRA
- Code P: Excess contributions taxable in 2021 (prior year)
- Code 8: Excess contributions taxable in 2022 (current year)
Match codes exactly to the distribution event date and type. Multiple codes may apply in certain circumstances. For corrective distributions, verify whether the excess is taxable in the contribution year (Code P) or distribution year (Code 8).
3. Determine Taxable Amount Using Box 2a or Box 2b Checkbox
If Box 2a shows an amount, that represents the taxable portion calculated by the payer. If the first checkbox in Box 2b is marked (“Taxable amount not determined”), Box 2a may be blank, and the recipient must compute the taxable amount using the simplified method for qualified plans and 403(b) plans, or the pro-rata rule for traditional IRAs.
For Roth IRA distributions in 2022, the taxable amount is generally zero for qualified distributions. Non-qualified distributions may have taxable earnings. Use Form 8606 to compute the taxable portion of Roth IRA distributions and to track basis in traditional IRAs with nondeductible contributions.
4. Apply Lump-Sum Distribution Rules if Box 3 Shows Capital Gain
If Box 3 contains a capital gain amount from a qualified plan lump-sum distribution, and the recipient (or beneficiary of a deceased participant) was born before January 2, 1936, the recipient may elect to apply a preferential 20% capital gain tax rate using Form 4972. This is not tax-free treatment but rather a reduced tax rate on the capital gain portion. This rule applies only to 2022 distributions qualifying as lump-sum distributions under applicable provisions. File Form 4972 with the 2022 tax return and do not report the capital gain on Schedule D.
5. Reconcile Federal Withholding in Box 4 Against Tax Return
If Box 4 shows federal income tax withheld, attach Copy B to the tax return and claim the withheld amount on Form 1040.
For eligible rollover distributions paid directly to the recipient (not as a direct rollover), 20% mandatory federal income tax withholding applies. Recipients cannot elect out of this 20% withholding on eligible rollover distributions paid to them. Beginning in 2022, Form W-4 (Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions) is used for withholding elections on nonperiodic payments and eligible rollover distributions. Form W-4P applies to periodic pension and annuity payments. To avoid the 20% mandatory withholding, recipients must elect a direct rollover to an eligible retirement plan.
6. Account for Designated Roth Account Distributions (Box 2a, Box 7, and Box 11)
If the distribution is from a designated Roth account in 2022 (Code B in Box 7), review Box 2a carefully:
- For qualified distributions (meeting the 5-year holding period and a qualifying event, such as reaching age 59½, death, or disability): Box 2a typically shows zero or is left blank, indicating no taxable amount.
- For non-qualified distributions: Box 2a shows only the earnings portion, which is taxable.
If an amount appears in Box 11, this indicates the first year designated Roth contributions were made to the account. Use this year to determine whether the 5-year holding period has been met. The 5-year period begins January 1 of the year shown in Box 11.
Non-qualified distributions may be subject to the 10% early distribution penalty (Code 1) unless an exception applies (Code 2, 3, or 4). Code J is used for Roth IRA distributions.
7. Report Employee Contributions and Basis in Box 5
Box 5 shows employee contributions or after-tax basis recovered tax-free in 2022, or basis in a designated Roth account. This box does NOT show IRA contribution amounts made during the year. For traditional IRAs with nondeductible contributions, Box 5 reduces the taxable amount through pro rata calculation; use Form 8606, Part I, to compute the nontaxable portion. For designated Roth account distributions, Box 5 shows the portion that represents returned after-tax contributions (basis).
For Roth conversions in 2022, Box 5 may show nondeductible IRA contributions that were converted; track this conversion basis separately using Form 8606.
8. Evaluate Net Unrealized Appreciation (NUA) in Box 6
If Box 6 shows NUA from employer securities distributed as part of a lump-sum qualified plan distribution:
- General rule: NUA represents appreciation on employer stock that is not taxed at distribution but is deferred until the securities are sold. Upon sale, the NUA portion receives long-term capital gain treatment regardless of holding period after distribution.
- Direct rollover to Roth accounts: If employer securities with NUA are rolled over to a designated Roth account in the same plan or to a Roth IRA, the NUA amount is included in Box 2a as taxable income in 2022.
- Keeping securities in a taxable account: If the recipient takes possession of employer securities and holds them in a taxable brokerage account, the NUA shown in Box 6 remains tax-deferred until the securities are sold.
Recipients may elect to include NUA in gross income in 2022 on Form 4972, but this is rarely advantageous. The standard NUA strategy involves taking the employer securities in-kind, paying ordinary income tax only on the cost basis, and deferring capital gains tax on the NUA until the securities are sold.
9. Complete Box 12 FATCA Reporting Requirement Check
If Box 12 is checked, the payer reports this account under the Foreign Account Tax Compliance Act (FATCA). Recipients may have a filing requirement on Form 8938 if their household’s specified foreign financial assets exceed the applicable threshold for 2022. Thresholds vary based on filing status and whether the taxpayer lives in the United States or abroad. Review Form 8938 instructions to determine if filing is required.
10. Report Excess Deferrals and Excess Contributions (Code 8 or P)
If Code 8 appears in Box 7, the distribution represents a corrective distribution of excess deferrals, excess contributions, or excess aggregate contributions that are taxable in 2022. The amount in Box 1 includes both the excess and earnings on the excess.
If Code P appears, the excess was taxable in the prior year (2021), but earnings are taxable in 2022.
Report these amounts on Form 1040: on the wages line if the recipient is under minimum retirement age, or on the pension and annuity line if over minimum retirement age. For excess designated Roth contributions returned with Code 8 or P, the contributions themselves are not taxed again, but any earnings are subject to tax.
Record Retention
Retain Copy B of Form 1099-R with tax return records. Keep documentation supporting basis calculations, RMD computations, and any Form 8606 filings for at least three years after the return due date or filing date, whichever is later. For NUA elections, retain documentation permanently, as it affects the cost basis of employer securities.
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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.
