The 1099-R form is necessary to file when a distribution of retirement benefits, such as pensions or annuities, of $10 or more has occurred. The form itself has many boxes, and choosing the appropriate box is imperative.
1099-R Reporting Requirements:
Box 1, Gross Distribution, is for the gross value of the distributions the taxpayer received during the previous tax year.
Box 2a, Taxable Amount, is for the value of the portion of the distributions (Box 1) that is subject to income tax. This amount is calculated by subtracting the number shown in Box 5 from the number shown in Box 1.
Box 2b, has several functions. Check the "the taxable amount not determined" box to indicate that the institution preparing the form wasn't able to determine what portion of the distribution is taxable. Check the "total distribution" box to indicate that the full balance of the retirement account was distributed during the previous tax year.
Box 3, Capital Gain, is for a lump-sum distribution received from a qualified plan if born before January 2, 1936 (or the beneficiary of someone born before January 2, 1936).
Box 4, Federal Income Tax Withheld, is for the total amount of the federal income tax withheld from the taxpayer's distributions during the previous tax year.
Box 5, Employee Contributions, is for the portion of the distributions that is not taxable for the previous tax year. This includes any of taxpayer's contributions on which he or she already paid income taxes, as well as any insurance premiums the taxpayer is allowed to recover when filing the tax return.
Box 6, Net Unrealized Appreciation in Employers Securities, is for a lump-sum distribution received from a qualified plan that includes securities of the employer’s company.
Box 7, Distribution Codes, is for entering the applicable distribution codes, which indicates the type of distribution received. The detailed list of all the codes and what each of them means is written on the back of the form.
Box 8, Other, is for an annuity contract received as part of a distribution. The value of the contract is shown here. It is not taxable upon receipt and should not be included in boxes 1 & 2a.
Box 9a, Your percentage of total distribution, is for the percentage of a total distribution made to the taxpayer when more than one person received the distribution.
Box 9b, Total employee contributions, is for a life annuity from a qualified plan or from a section 403(b) plan (with after-tax contributions), an amount may be shown for the employee’s total investment in the contract.
Box 10, Amount allocable to IRR within 5 years, is for the amount of the state tax withheld from taxpayer's distributions during the previous tax year. This is considered a partial prepayment of the taxpayer's personal state income tax.
Box 11, 1st year of designated Roth contribution, is for the first year a contribution was made to the designated Roth account reported on this form.
Boxes 12–17, Taxes Withheld, are for the state or local income tax withheld from the distribution. Boxes 14 and 17 show the part of the distribution subject to state and/or local tax.
The 1099-R tax form is issued by the custodian and is due to the taxpayer by January 31st. The 1099-R deadline to file with the IRS is February 28th if paper filing and March 31st if filing electronically. If the deadline date falls on a Saturday, Sunday or legal holiday, the deadline would be the next business day.
For more information, the 1099-R Form instructions can be found here, https://www.irs.gov/pub/irs-pdf/i109