Tax Dictionary – Form 1099-R, Distribution From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

IRS definition

File this form for each person to whom you have made a designated distribution or are treated as having made a distribution of $10 or more from

  • profit-sharing or retirement plans,
  • any individual retirement arrangements (IRAs),
  • annuities, pensions, insurance contracts, survivor income benefit plans,
  • permanent and total disability payments under life insurance contracts,
  • charitable gift annuities, etc.

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You will receive a Form 1099-R when you make a withdrawal from a IRA, 401(k) or other retirement account. This form includes information such as: the amount you withdrew, how much is taxable (if that was determined), any taxes that were withheld, and a code that shows what type of distribution it was. Other information such as capital gains and employee contributions will be recorded on the form, if applicable.

Unless you have a qualified distribution from a Roth IRA, you will have to pay tax on the withdrawals. If your form has Code 1, you may also owe a 10% early withdrawal penalty unless you qualify for an exception.

If you receive a Form 1099-R and do not report the distribution on your tax return, the IRS will likely send you a CP2000, Underreported Income notice. This IRS notice will propose additional tax, penalties and interest on your distributions and any other unreported income. Learn how to handle an underreporter inquiry (CP2000).

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