« Down To the Banana Republic...Retiring Abroad | Main | How Much Is Social Security Worth? »

Q And A...1099-R and Form 5498 IRA Forms At Tax Time

1099-R.jpgCheck your mailbox-these forms should be coming any day.  And these forms tend to generate a lot of questions.  Always consult your tax professional or IRA custodian.  We used IRS Publication 590 to find answers.

This is the most common question we receive:

I rolled money from my employer plan (401k, 403b etc.) last year-I just received a 1099-R Form this week.  What do I need to do with this form?

The trustee of your employer plan reports rollovers from the plan on 1099-R.  This is not taxable if the plan rolled into an IRA.  Your did a "direct rollover."  You'll be receiving a 5498 Form from the IRA custodian and the amounts on that form should be equal to the amount on your 1099-R.  If your did a distribution from an IRA account you'll receive the same 1099-R form.

Bankrate.com explains some of the boxes on the 1099-R.

What the 1099-R tells you:
Box 1 of the form shows the total amount of your retirement fund that was distributed. The more important amount to you right now is in box 2a, the taxable amount. For direct rollovers from one qualified plan to another, that amount is generally zero.

Also check box 7, the distribution code. A letter or number should be here, explaining to the IRS exactly why your retirement money was taken out and just what was done with it. Direct rollovers to another qualified plan are coded with the letter "G." This includes transfers to another company's 401(k) plan, a tax-sheltered 403(b) annuity, a government 457(b) plan or an IRA.


 

 

Posted on Wednesday, February 6 by Registered CommenterWise Owl in | Comments Off