Form 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (2011)
What the Form Is For
Form 1099-R is the tax document you'll receive whenever you take money out of your retirement savings. Think of it as a receipt that your retirement plan administrator, insurance company, or IRA trustee sends to both you and the IRS showing exactly how much you withdrew during the year.
This form covers withdrawals from virtually every type of retirement account imaginable: traditional IRAs, 401(k) plans, pension plans, annuities you purchased yourself or through work, profit-sharing plans, and even specialized accounts like SEP-IRAs and SIMPLE IRAs. It also reports distributions from insurance contracts, survivor benefits, and charitable gift annuities. Essentially, if you took $10 or more from any retirement-related account in 2011, you should receive a Form 1099-R.
The form serves a crucial purpose: it tells you (and the IRS) how much of your withdrawal is taxable. Not all retirement distributions are fully taxable—some money represents contributions you already paid taxes on. Form 1099-R breaks down the total amount you received, the taxable portion, any taxes already withheld, and uses special codes to indicate the type of distribution you received.
When You’d Use Form 1099-R
Late/Amended Filing
For 2011, payers must furnish Form 1099-R to recipients by January 31, 2012. If you're the person or organization making the distribution, you must file the form with the IRS by February 28, 2012 if filing on paper, or April 2, 2012 if filing electronically.
If you discover an error after filing, you must correct it immediately by filing a corrected Form 1099-R. Common reasons for corrections include entering the wrong distribution amount, using an incorrect distribution code that could affect the recipient's tax liability, or failing to report a recharacterization or rollover properly. When you file a corrected form, mark it "CORRECTED" in the appropriate box at the top.
Recipients who notice errors on their Form 1099-R should contact the payer immediately to request a corrected form before filing their tax return. If you've already filed your return using incorrect information from Form 1099-R, you may need to file an amended return (Form 1040X) once you receive the corrected information. The IRS uses the codes and amounts on Form 1099-R to verify distributions on tax returns, so accuracy is essential.
Key Rules or Details for 2011
The 2011 version of Form 1099-R introduced several significant changes that payers needed to understand:
Box Renumbering: The form underwent a major restructuring. What were previously boxes 10 through 15 became boxes 12 through 17. Most importantly, a new box 10 was created specifically to report "Amount allocable to IRR within 5 years" (in-plan Roth rollover amounts), and box 11 was designated for reporting the first year of designated Roth contributions.
End of Truncation: The IRS ended its pilot program that allowed partial Social Security numbers on recipient copies. For 2011 and beyond, payers must show the recipient's complete identifying number on all copies of the form.
In-Plan Roth Rollovers: This was one of the biggest changes for 2011. Employees could now roll over amounts from their regular 401(k) or 403(b) accounts into a designated Roth account within the same plan. These "in-plan Roth rollovers" required special reporting because they're taxable in the year of the rollover, and distributions of these amounts within five years have special tax implications.
Prohibited Transactions: New instructions clarified how to report when an IRA owner engages in a prohibited transaction (like using IRA assets for personal benefit). When this occurs, the entire IRA is treated as distributed on January 1 of that year, and payers must report it using Code 5.
Distribution Code Changes: Code B was reworded to cover all distributions from designated Roth accounts, and Code D was eliminated, replaced by the updated use of Codes 8 and P for corrective distributions.
Minimum Reporting Threshold: Payers must file Form 1099-R for any distribution of $10 or more. However, certain tax-exempt distributions (like workers' compensation or VA payments) don't require reporting unless part of the distribution is taxable.
Step-by-Step (High Level)
For Payers (Plan Administrators, Trustees, Insurance Companies)
1) Calculate the distribution
Determine the gross amount distributed to each participant during 2011.
2) Determine taxability
Figure out how much of the distribution is taxable versus tax-free (based on after-tax contributions, basis, or other factors). If you can't reasonably calculate this, leave box 2a blank and check the "Taxable amount not determined" box.
3) Select the correct distribution code(s)
This is critical. Use the Guide to Distribution Codes to identify the appropriate code(s) for box 7. Common codes include: Code 1 (early distribution, no exception), Code 2 (early distribution with exception), Code 7 (normal distribution), Code G (direct rollover), Code J (Roth IRA distribution), and Code 4 (death benefit).
4) Complete all relevant boxes
Fill in the gross distribution (box 1), taxable amount (box 2a), federal tax withheld (box 4), recipient's basis or employee contributions (box 5), and any other applicable boxes.
5) File separately when required
If someone received both a direct rollover and a cash distribution, file two separate Forms 1099-R with different codes.
6) Furnish and file by deadlines
Furnish to recipient by January 31, 2012, and file with IRS by February 28 (paper) or April 2 (electronic).
For Recipients (Individuals Receiving Distributions)
1) Receive your Form 1099-R
By late January or early February 2012.
2) Review for accuracy
Check that all amounts and your identifying information are correct. Look especially at box 7—the distribution code affects how you report the distribution.
3) Report on your tax return
Enter the amount from box 1 (gross distribution) on line 16a of Form 1040 or line 12a of Form 1040A. Enter the taxable amount from box 2a on line 16b (Form 1040) or line 12b (Form 1040A).
4) Report federal tax withheld
Include the amount from box 4 as federal income tax withheld on your return.
5) Check for additional taxes
Depending on the distribution code, you may owe the 10% early distribution penalty on Form 5329, or you may need to report the distribution on Form 8606 (for IRAs with basis).
6) Attach Copy B if required
Attach Copy B to your federal tax return if federal tax was withheld (shown in box 4).
Common Mistakes and How to Avoid Them
Mistake #1: Using the wrong distribution code in box 7
The IRS relies heavily on these codes to verify proper tax treatment. Using Code 1 when Code 2 applies could trigger an incorrect early distribution penalty for the recipient. Solution: Carefully review the Guide to Distribution Codes and understand the recipient's situation before assigning a code.
Mistake #2: Filing one Form 1099-R when multiple forms are required
If someone receives both a direct rollover and a cash distribution, these must be reported on separate forms with different codes. Solution: When a distribution has components requiring different codes, prepare multiple Forms 1099-R.
Mistake #3: Entering negative amounts
Form 1099-R doesn't allow negative values in any box. If an overpayment was corrected, this should be handled through appropriate adjustment procedures, not negative numbers. Solution: Use repayment reporting procedures outlined in the instructions.
Mistake #4: Failing to check the "Taxable amount not determined" box
For IRA distributions, payers typically don't have the information to calculate the taxable amount. If you leave box 2a blank, you must check this box in 2b. Solution: When in doubt about the taxable amount, leave box 2a blank and check the appropriate box in 2b.
Mistake #5: Incorrectly reporting Roth IRA distributions
Roth distributions generally should show the gross amount in box 1, with box 2a left blank and the "Taxable amount not determined" box checked. Code J, Q, or T should be used depending on circumstances. Solution: Use Code Q for qualified distributions, Code T for exceptions, and Code J for other early distributions from Roth IRAs.
Mistake #6: Reporting non-reportable trustee-to-trustee transfers
A direct transfer from one IRA to another IRA of the same type generally isn't reported on Form 1099-R. Solution: Only report transfers that are actually recharacterizations, conversions, or involve distribution codes (like Roth conversions or direct rollovers from qualified plans).
Mistake #7: Not reporting required distributions
Forgetting to file Form 1099-R for distributions over $10 can result in IRS penalties. Solution: Maintain accurate records of all distributions throughout the year and file for every recipient meeting the threshold.
Mistake #8: Using incorrect recipient information for beneficiary distributions
When distributing to a beneficiary after the account owner's death, use the beneficiary's name and taxpayer identification number, not the deceased person's. Solution: Obtain proper beneficiary identification information before processing death distributions.
What Happens After You File
For Payers
After you file Forms 1099-R with the IRS and furnish copies to recipients, the IRS matches the information against what recipients report on their tax returns. If discrepancies exist, the IRS may send notices to recipients questioning their reported amounts. Ensure accuracy to avoid creating problems for your recipients.
If you discover an error after filing, immediately prepare and file a corrected Form 1099-R marked "CORRECTED." Furnish the corrected form to the recipient and file it with the IRS. Don't wait until the next tax year to correct mistakes.
The IRS may assess penalties for late filing, failure to file, or incorrect information. Penalties can range from $50 to $270 per form depending on how late you file and whether the error was intentional. For small businesses, maximum penalties are capped, but they can still be substantial.
For Recipients
Once you receive Form 1099-R, use it to complete your tax return. The information flows to several places on Form 1040 depending on the type of distribution:
- Regular pension and IRA distributions: Lines 16a and 16b (or 12a and 12b on Form 1040A)
- Federal tax withheld: Included in your total withholding on line 64
- Early distribution penalty (if applicable): Calculated on Form 5329
- Roth conversions and rollovers: May require Form 8606
The IRS computer systems automatically match your Form 1099-R to your tax return. If amounts don't match, you may receive a CP2000 notice proposing additional tax, penalties, and interest. If you receive such a notice and believe it's incorrect, respond promptly with documentation (like a corrected Form 1099-R).
If you rolled over a distribution within 60 days, you still report the gross distribution on line 16a but enter zero taxable amount on line 16b, with "Rollover" written next to it. This shows the IRS you handled the distribution properly.
FAQs
Q1: I received multiple Forms 1099-R for 2011. Do I report each one separately?
A: Yes, technically you can receive multiple Forms 1099-R—from different retirement accounts, or even multiple forms from the same account if you received different types of distributions (like a rollover and a regular distribution). Add up all the amounts in box 1 from all forms for line 16a of your tax return, and add up all taxable amounts from box 2a for line 16b. However, pay attention to the distribution codes, as some may require special reporting on other forms.
Q2: Box 2a is blank on my Form 1099-R, but box 2b says "Taxable amount not determined." What do I do?
A: This is common for IRA distributions. The payer doesn't have enough information to calculate your taxable amount, so you must figure it out yourself. For traditional IRAs, if you've never made non-deductible contributions, the entire amount is taxable. If you have made non-deductible contributions (and filed Form 8606 in previous years), you'll need to complete Form 8606 to calculate the tax-free portion based on the ratio of your basis to your total IRA value.
Q3: I received a distribution code 1 (early distribution), but I qualify for an exception. What should I do?
A: The payer may not have known you qualified for an exception. Report the distribution normally, but complete Form 5329 to claim your exception from the 10% penalty. Common exceptions include distributions for first-time home purchases (up to $10,000), qualified higher education expenses, certain medical expenses, or if you're disabled. Form 5329 instructions list all exceptions.
Q4: I did a 60-day rollover—moved money from one IRA to another within 60 days. Why did I still receive Form 1099-R?
A: Any distribution from an IRA triggers Form 1099-R reporting, even if you redeposited it within 60 days. Report the gross distribution on line 16a of Form 1040, but enter zero on line 16b (taxable amount) and write "Rollover" next to it. Keep documentation proving you completed the rollover within 60 days in case the IRS questions it.
Q5: What's the difference between a direct rollover (Code G) and a regular rollover?
A: A direct rollover means the money went directly from one retirement plan to another (or to an IRA) without you touching it. This avoids the mandatory 20% withholding that applies to eligible rollover distributions paid to you. If you receive the check yourself and then deposit it into another retirement account within 60 days, it's a regular rollover—and if it's from a qualified plan (not an IRA), 20% was probably withheld, which you'll need to make up from other sources to roll over the full amount.
Q6: I turned 70½ in 2011. Do I need to take a required minimum distribution (RMD), and will it show up on Form 1099-R?
A: If you turned 70½ in 2011, you must take your first RMD by April 1, 2012 (for the 2011 tax year). Your second RMD must be taken by December 31, 2012. Form 1099-R will show your distribution, but it doesn't specifically identify it as an RMD. RMDs are not eligible for rollover—if you try to roll one over, it's treated as an excess contribution subject to a 6% penalty.
Q7: My Form 1099-R shows tax withheld in box 4, but I didn't authorize withholding. Is this correct?
A: For eligible rollover distributions from qualified plans (401(k), 403(b), etc.) paid to you rather than rolled over directly, 20% mandatory withholding applies—you don't have a choice. For other distributions, withholding is voluntary, but it's automatic unless you elect out using Form W-4P. If unexpected withholding occurred, the amount is still credited to your tax account, so you'll get it back if you don't owe tax. For future distributions, submit Form W-4P to change your withholding elections.
Sources
This summary is based on official IRS guidance for tax year 2011:
- Instructions for Forms 1099-R and 5498 (2011)
- Form 1099-R (2011)
- Publication 575: Pension and Annuity Income (2011)
Important Note: This guide covers tax year 2011 only. Tax laws and form requirements change over time. For current-year information, always consult the latest IRS guidance at IRS.gov.
