A 1099-R reports money you withdrew from a retirement account or annuity
A 1099-R is a tax form that reports distributions — money you took out — from retirement accounts, pensions, annuities, or insurance contracts. The IRS requires the institution holding your account to send you this form if you withdrew money during the year, and you use it to report that income on your tax return.
You will receive a 1099-R from the financial institution that held the account. If you have a 401(k) at work, your plan administrator sends it. If you have an IRA at a bank or brokerage, that institution sends it. If you receive a pension or annuity payment, the company paying you sends it. The form arrives by January 31 of the year after the withdrawal.
The 1099-R does not mean you owe taxes on the full amount shown — some distributions are tax-free, some are taxed as ordinary income, and some trigger an additional 10 percent penalty if you withdrew before age 59½. The form itself tells you which category applies to your withdrawal, and that determines how you report it.
Key Takeaways
- A 1099-R reports the total amount you withdrew from a retirement account, pension, or annuity during the year.
- The form shows whether your distribution is taxable, tax-free, or subject to an early withdrawal penalty.
- You receive a 1099-R from the institution that held the account, not from the IRS.
- The amount on the form is not necessarily the amount you owe in taxes — tax treatment depends on the account type and your age at withdrawal.
What information appears on a 1099-R
The form lists the gross distribution amount in Box 1 — the total money you withdrew before any taxes or fees were taken out. Box 2a shows the taxable amount, which may be less than the gross if part of your withdrawal was a return of money you already paid taxes on. Box 2b indicates whether the full amount in Box 2a is taxable or whether some is tax-free.
Box 7 contains a code that describes the type of distribution. Code 1 means an early withdrawal before age 59½. Code 2 means a distribution after age 59½. Code 3 means a disability distribution. Code 4 means a death distribution paid to a beneficiary. Code 7 means a normal retirement distribution. Other codes cover rollovers, conversions, and special circumstances.
Box 4 shows federal income tax withheld from your distribution, if any. If your plan or IRA withheld 20 percent or another percentage, that amount appears here. This is not the tax you owe — it is money already sent to the IRS on your behalf. You will reconcile this amount when you file your return.
Different distribution codes and what they mean for your taxes
The code in Box 7 tells you how the IRS expects the distribution to be taxed. A code 1 distribution — an early withdrawal — is subject to ordinary income tax plus a 10 percent early withdrawal penalty unless an exception applies. Common exceptions include distributions for disability, medical expenses over 7.5 percent of adjusted gross income, health insurance premiums while unemployed, and certain first-time home purchases (up to $10,000 lifetime from an IRA).
A code 2 distribution — after age 59½ — is taxed as ordinary income but has no early withdrawal penalty. A code 3 distribution for disability is taxed as ordinary income but exempt from the 10 percent penalty. A code 4 distribution to a beneficiary after the account holder's death is taxed as ordinary income to the beneficiary, with no early withdrawal penalty.
A code 7 distribution is a normal retirement distribution, taxed as ordinary income with no penalty. Codes 2 and 7 are the most common for people who have reached retirement age. If you see a code that does not match your situation — for example, code 1 when you were over 59½ — contact the institution that issued the form and ask them to correct it.
How 1099-R distributions differ by account type
A 1099-R from a traditional IRA or 401(k) reports distributions that are almost entirely taxable as ordinary income, because contributions were made with pre-tax dollars and the account grew tax-deferred. When you withdraw, the full amount (minus any nondeductible contributions you made) is taxable.
A 1099-R from a Roth IRA is different. Contributions to a Roth are made with after-tax dollars, so withdrawals of contributions are never taxed. Only the earnings portion of a Roth distribution is taxable, and only if you withdraw earnings before age 59½ and before the account has been open for five years. The form will show the gross distribution, but the taxable amount in Box 2a may be zero or much lower than the gross.
A 1099-R from a pension or annuity shows payments from an insurance contract or employer pension plan. These are taxed based on how much of each payment represents your own contributions versus the plan's earnings. The form calculates this for you and shows the taxable portion in Box 2a.
Rollovers and transfers shown on a 1099-R
If you rolled over money from one retirement account to another — for example, from a 401(k) to an IRA — you will still receive a 1099-R for the amount that left the first account. The form will show a code 2 (or sometimes code G for a direct rollover) in Box 7. A direct rollover, where the institution transfers money straight to another account without you touching it, is not taxable.
An indirect rollover, where you receive a check and deposit it yourself, is also not taxable if you complete the rollover within 60 days. However, the institution withholds 20 percent of the amount as a precaution. You must deposit the full amount (including the withheld 20 percent from another source) within 60 days to avoid taxes and penalties on the withheld portion.
When you file your tax return, you report the rollover on Form 8606 (for IRAs) or on your 1040 with a notation that the distribution was rolled over. The amount is not included in your taxable income for the year.
What to do if you receive a 1099-R you did not expect
If you received a 1099-R but did not withdraw money from that account, contact the institution when ready. The distribution may have been processed in error, or the form may have been issued to the wrong person. Ask the institution to issue a corrected form or to reverse the transaction if it was a mistake.
If you inherited a retirement account and received distributions as a beneficiary, you will receive a 1099-R even though you did not withdraw the money yourself. The form is correct — beneficiary distributions are taxable to the beneficiary, and you must report them on your return. The institution is required to send the form.
If the amount on the form does not match what you withdrew, or if the code in Box 7 does not match your situation, request a corrected form (called a Form 1099-R with "CORRECTED" printed on it). The institution has until February 28 to issue a correction. Do not file your tax return until you have the correct form.
How to report a 1099-R on your tax return
You report the taxable amount from Box 2a of your 1099-R on Form 1040, Schedule 1, line 5a (for IRAs) or line 5b (for pensions, annuities, and other distributions). If you received multiple 1099-Rs, add up all the taxable amounts and report the total. The federal tax withheld from Box 4 goes on Form 1040, line 33, as a payment toward your tax liability.
If the distribution was a rollover and you reported it on Form 8606, the amount does not go on Schedule 1 — instead, you note on your return that it was a rollover and it is excluded from income. If the distribution was a Roth conversion, you report it differently than a regular distribution, also on Form 8606.
If you owe the 10 percent early withdrawal penalty because you were under 59½ and no exception applied, you report this on Form 5329. The penalty is calculated on the taxable amount and added to your tax liability. Some exceptions — such as disability or medical expenses — require you to file Form 5329 to claim the exception and avoid the penalty.
Frequently Asked Questions
Do I have to pay taxes on the full amount shown on the 1099-R?
Not necessarily. The amount in Box 1 is the gross distribution, but Box 2a shows the taxable amount, which may be lower. For Roth IRAs, the taxable amount may be zero if you withdrew only contributions. For rollovers, the amount is not taxable if completed within 60 days. The code in Box 7 tells you whether a penalty applies.
What does it mean if Box 7 shows code 1?
Code 1 means you withdrew money before age 59½. This distribution is subject to ordinary income tax plus a 10 percent early withdrawal penalty, unless an exception applies. Common exceptions include disability, medical expenses, health insurance while unemployed, and first-time home purchases (up to $10,000 from an IRA). Check Form 5329 to see if you may have access to for an exception.
I did a rollover but still got a 1099-R. Do I owe taxes?
If it was a direct rollover (the institution transferred money directly to another account), you do not owe taxes. If it was an indirect rollover (you received a check), you do not owe taxes if you deposited the full amount within 60 days. Report the rollover on Form 8606 to exclude it from your taxable income. The 20 percent withheld will be refunded when you file your return.
What if the 1099-R shows the wrong amount or code?
Contact the institution that issued the form and ask for a corrected 1099-R. They must issue it by February 28 if you request it before then. Do not file your tax return until you have the correct form. If the institution does not correct it, you can file your return showing the correct amount and attach a statement explaining the discrepancy.