Form 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (2017 Tax Year) — A Complete Guide for Taxpayers
What Form 1099-R Is For
Form 1099-R is an information return issued by financial institutions, plan administrators, and insurance companies to report distributions of $10 or more from retirement accounts and similar arrangements. Think of it as a receipt showing money you took out of your retirement savings during 2017.
This form covers a wide range of retirement-related distributions, including traditional IRAs, Roth IRAs, 401(k) plans, 403(b) plans, pension plans, annuities, profit-sharing plans, and government section 457(b) plans. It also reports distributions from insurance contracts, survivor benefit plans, and even charitable gift annuities.
When you receive money from any of these sources—whether it's a monthly pension check, a lump-sum withdrawal from your 401(k), a required minimum distribution from your IRA, or a rollover to another retirement account—the payer must document it on Form 1099-R. The form tells both you and the IRS critical information: how much you received (Box 1), how much is taxable (Box 2a), whether federal income tax was withheld (Box 4), and what type of distribution it was (Box 7 distribution codes).
The form serves multiple purposes. It helps you accurately report retirement income on your tax return (typically on the lines for "Pensions and annuities" or "IRA distributions" on Form 1040). It allows the IRS to verify that you've reported all retirement distributions. And importantly, the distribution codes help determine whether you owe additional taxes, such as the 10% early withdrawal penalty for distributions taken before age 59½ without a qualified exception. IRS.gov
When You’d Use Form 1099-R (Filing Late or Amended Returns)
For the 2017 tax year, payers were required to send you Copy B of Form 1099-R by January 31, 2018. If you filed your 2017 tax return before receiving all your 1099-R forms, or if you received a corrected 1099-R after filing, you'll need to file an amended return.
Filing an Amended Return
If you discover you didn't report a 1099-R distribution on your original 2017 return, or if the information was incorrect, you must file Form 1040-X (Amended U.S. Individual Income Tax Return). Generally, you have three years from the date you filed your original return or two years from the date you paid the tax (whichever is later) to file an amended return and claim a refund. For returns filed before the April deadline, count from the tax deadline date, not your actual filing date.
Corrected Forms from Payers
Payers who discover errors on a Form 1099-R they've already issued must send you a corrected form marked "CORRECTED" at the top. While there's no hard IRS deadline for corrections, the IRS prefers corrections within three years to align with the statute of limitations for tax refunds. Common reasons for corrections include wrong distribution amounts, incorrect distribution codes in Box 7, or errors in the taxable amount calculations. IRS.gov
Late Receipt
If you haven't received an expected 1099-R by mid-February, contact the payer immediately. If you still haven't received it by the time you need to file, you can file your return using your own records and calculations, but you should clearly document your sources and keep detailed records in case the IRS has questions.
Key Rules or Details for 2017
Several important rules governed Form 1099-R reporting and distributions in 2017:
Reporting Threshold
Payers must issue Form 1099-R for any distribution of $10 or more from covered retirement arrangements.
Minimum Required Distributions (RMDs)
If you turned 70½ during 2017 or earlier, you were generally required to take minimum distributions from traditional IRAs, SEP IRAs, SIMPLE IRAs, and employer-sponsored retirement plans (though Roth IRAs during the owner's lifetime are exempt). Failing to take RMDs triggers a harsh 50% excise tax on the amount that should have been distributed.
Roth IRA Conversions
Distributions from traditional IRAs, SEP IRAs, or SIMPLE IRAs that were converted to Roth IRAs in 2017 must be reported on Form 1099-R, even if the conversion was a trustee-to-trustee transfer. These conversions are taxable in the year of conversion and use distribution codes 2 or 7 depending on your age.
Direct Rollovers
When you directly roll over an eligible distribution from a qualified plan, 403(b) plan, or governmental 457(b) plan to another eligible retirement plan or IRA, the payer reports the gross distribution in Box 1 but shows zero (0) in Box 2a (taxable amount), with distribution Code G. This ensures you're not taxed on money that never left the retirement system.
Early Distribution Penalty
Distributions taken before age 59½ are generally subject to a 10% additional tax unless a specific exception applies (death, disability, substantially equal periodic payments, certain medical expenses, first-time home purchase for IRAs, etc.). The distribution codes in Box 7 help identify whether exceptions apply.
Designated Roth Accounts
For 2017, if you participated in a designated Roth account within a 401(k), 403(b), or governmental 457(b) plan, distributions are reported separately on Form 1099-R. Qualified distributions (made after age 59½, death, or disability AND after a 5-year holding period) are tax-free.
Corrective Distributions
Excess contributions, excess deferrals, and excess aggregate contributions that were distributed in 2017 (including earnings) are taxable and must be reported. The taxability depends on the type of excess and when it's corrected. IRS.gov
Step-by-Step (High Level)
Step 1: Receive and Review Your Forms
By late January or early February 2018, you should receive Form 1099-R from every institution that paid you retirement distributions in 2017. Carefully check that your name, Social Security number, and address are correct. Verify that the amounts match your records.
Step 2: Understand the Key Boxes
- Box 1 (Gross Distribution): The total amount distributed to you before taxes
- Box 2a (Taxable Amount): The portion subject to income tax
- Box 2b: Check boxes indicating if the taxable amount wasn't determined or if it was a total distribution
- Box 4 (Federal Income Tax Withheld): Amount withheld for federal taxes
- Box 5: Your after-tax contributions or designated Roth contributions recovered
- Box 7 (Distribution Codes): Critical codes identifying the distribution type and tax treatment
Step 3: Determine Your Tax Treatment
Use the distribution codes in Box 7 to understand your tax situation. Code 1 means early distribution with no known exception (likely subject to 10% penalty). Code 7 means normal distribution (you're at least 59½). Code G means direct rollover (not currently taxable). Code J relates to Roth IRA distributions. There are many codes, and some forms show multiple codes.
Step 4: Report on Your Tax Return
Report IRA distributions on the line for "IRA distributions" on Form 1040. Report pensions and annuities on the "Pensions and annuities" line. Enter the gross distribution on one line and the taxable amount on the corresponding "taxable amount" line. If Box 2a is blank but Box 2b shows "Taxable amount not determined," you must calculate the taxable amount yourself using IRS publications.
Step 5: Calculate Additional Taxes if Applicable
If you took an early distribution without a qualified exception, you'll need to complete Form 5329 to calculate the 10% additional tax. Some exceptions are entered directly on Form 5329 to reduce or eliminate the penalty.
Step 6: Attach Form 1099-R to Your Return
Attach Copy B of Form 1099-R to your paper return if you're filing by mail and federal income tax was withheld (shown in Box 4). If filing electronically, keep the form with your tax records but don't attach it. IRS.gov
Common Mistakes and How to Avoid Them
Mistake #1: Not Reporting All 1099-R Forms
The IRS receives copies of all Forms 1099-R issued to you. If you fail to report one, computer matching will flag the discrepancy, triggering notices and potential penalties.
Solution: Keep careful records of all retirement accounts and distributions. Check your accounts in January to ensure you receive all expected forms.
Mistake #2: Using the Wrong Distribution Code Interpretation
Misunderstanding Box 7 codes can lead to paying too much tax (or too little). For example, assuming Code 1 automatically means you owe the 10% penalty when you might qualify for an exception, or thinking Code 7 means nothing is taxable when you still owe income tax.
Solution: Carefully read the code definitions in the form instructions or use IRS Publication 575 to understand what each code means for your specific situation.
Mistake #3: Double-Counting Rollovers
If you rolled over a distribution to another retirement account, you might receive 1099-R forms from both the distributing institution (showing the gross distribution with Code G) and the receiving institution (reporting the contribution on Form 5498). Reporting the distribution as taxable income when it was a direct rollover is a costly error.
Solution: Look for Code G in Box 7, which indicates a direct rollover. Report the amount but show zero taxable income if it was a proper rollover.
Mistake #4: Forgetting About Basis
If you made after-tax contributions to your retirement account over the years, part of your distribution may be tax-free (return of basis). Many people overlook this and pay tax on money they already paid tax on.
Solution: Check Box 5 for employee contributions or designated Roth contributions. If Box 2a is blank, you may need to calculate your tax-free portion using Form 8606 for IRAs or the Simplified Method for pensions.
Mistake #5: Incorrect Taxable Amount Calculations
When Box 2a is blank and Box 2b shows "Taxable amount not determined," you must calculate the taxable portion yourself. Many taxpayers either skip this or do it incorrectly.
Solution: Use IRS Publication 590-A and 590-B for IRA distributions, Publication 575 for pensions and annuities, and Form 8606 when applicable. Consider consulting a tax professional for complex situations.
Mistake #6: Missing the Corrected Form Deadline
If you receive a corrected 1099-R after filing your return and the correction changes your tax liability, you must file an amended return. Ignoring corrected forms can lead to IRS notices.
Solution: Keep checking your mail through February and March for corrected forms. If you receive one, promptly file Form 1040-X to amend your return. IRS.gov
What Happens After You File
Once you file your 2017 tax return reporting Form 1099-R distributions, several things occur behind the scenes:
IRS Computer Matching
The IRS electronically matches the information on your tax return against the information it receives from payers on Forms 1099-R. This matching typically occurs months after you file. If there's a discrepancy—such as an unreported distribution or mismatched amounts—the IRS computer system flags your return for review.
Notices and Letters
If the IRS finds a mismatch, you'll receive a notice (commonly CP2000) proposing changes to your tax return and indicating additional tax owed, plus interest and possibly penalties. These notices typically arrive 12 to 18 months after you file. You have the right to respond, provide explanations, and dispute incorrect information.
Refund Processing
If you had federal income tax withheld (Box 4) and are due a refund, the IRS processes your refund according to normal timelines—typically within 21 days for e-filed returns or six weeks for paper returns. The presence of Form 1099-R doesn't automatically delay your refund unless the information raises red flags.
Penalty Assessments
If you owe the 10% early distribution penalty and properly reported it on Form 5329, that additional tax is collected with your regular tax balance. If you failed to report the penalty when required, the IRS will assess it after examining your return, and you'll receive a notice of additional tax due.
Audit Potential
While Form 1099-R itself doesn't dramatically increase audit risk, certain situations attract IRS attention: large distributions with questionable early withdrawal exceptions, Roth conversions that might be improperly reported, or distributions that seem inconsistent with your age and circumstances. Most issues are resolved through correspondence, not full audits.
Record Retention
Keep copies of all Forms 1099-R and related documentation for at least three years from the date you filed your return (or the due date, whichever is later). For retirement account basis calculations, keep records indefinitely, as you'll need them for future distributions. IRS.gov
FAQs
Q1: I received a Form 1099-R for a direct rollover. Do I owe taxes?
Generally, no. A direct rollover from one qualified retirement account to another is not taxable at the time of the rollover. Look for Code G in Box 7, which indicates a direct rollover. Box 2a should show zero (0). Report the gross amount on your tax return but enter zero for the taxable amount. However, if you rolled over from a traditional IRA or 401(k) to a Roth IRA (a Roth conversion), the amount is taxable in 2017.
Q2: Box 2a is blank on my Form 1099-R. What do I do?
When Box 2a is blank, the payer couldn't determine the taxable portion—you must calculate it yourself. Check if Box 2b has "Taxable amount not determined" marked. For traditional IRA distributions, use Form 8606 if you've made nondeductible contributions. For pensions and annuities, use the Simplified Method (if your annuity starting date is after 1997) or the General Rule. IRS Publications 575, 590-A, and 590-B provide detailed calculation instructions.
Q3: I took money from my IRA before age 59½ due to disability. Will I owe the 10% penalty?
No, if you meet the IRS definition of disability, you qualify for an exception to the 10% early distribution penalty. The Form 1099-R should show Code 3 in Box 7. You'll still owe regular income tax on the distribution (unless it's from a Roth IRA and qualifies as tax-free), but you won't owe the additional 10% penalty. Report the distribution on your return and complete Form 5329 to claim the exception if necessary.
Q4: I turned 70½ in 2017. When do I need to take my first required minimum distribution?
For your first RMD, you have until April 1, 2018 (the year after you turn 70½) to take the distribution. However, if you wait until 2018, you'll also need to take your 2018 RMD by December 31, 2018—meaning two distributions in one year, which could push you into a higher tax bracket. Many people take their first RMD in 2017 to avoid doubling up. Any RMD for 2017 would be reported on a 2017 Form 1099-R.
Q5: Can I avoid taxes on my retirement distribution by donating to charity?
Possibly, through a Qualified Charitable Distribution (QCD). If you're at least 70½, you can direct up to $100,000 annually from your IRA directly to qualified charities. The distribution isn't included in your taxable income and can count toward your RMD. However, Form 1099-R reporting for QCDs didn't have special coding in 2017—the full distribution appears in Box 1, and you report it on your tax return but exclude it from taxable income. Documentation is crucial for IRS verification.
Q6: I received multiple Forms 1099-R from the same institution. Is this an error?
Not necessarily. Payers issue separate Forms 1099-R when distributions have different characteristics requiring different Box 7 codes. For example, if you took two distributions from your IRA in 2017—one before age 59½ (Code 1) and one after (Code 7)—you'd receive two forms. Similarly, distributions before and after turning 70½, or combinations of regular distributions and Roth conversions, each get their own forms. Verify that the total matches your records.
Q7: What if I disagree with the information on my Form 1099-R?
First, contact the payer immediately to discuss the discrepancy. If there's a genuine error, request a corrected Form 1099-R marked "CORRECTED." The payer must send the correction to both you and the IRS. If the payer won't correct what you believe is an error, you can still file your return with what you believe are the correct figures, but attach an explanation and keep thorough documentation. You might need to complete Form 5329 to claim exceptions or provide additional explanations, and be prepared for possible IRS correspondence. IRS.gov
Additional Resources
- IRS Publication 575: Pension and Annuity Income
- IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs)
- IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs)
- Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
- Form 8606: Nondeductible IRAs
For the most current information and 2017-specific guidance, visit IRS.gov/Form1099R or consult a qualified tax professional.
All information in this guide is sourced exclusively from official IRS publications and instructions for the 2017 tax year.
