A Guide to Understanding Your 1099-R

Understanding the tax documents related to your retirement accounts is important as you navigate your savings. This article serves as a guide to form 1099-R—what it is, how to read it, and what to do if you notice a mistake. 

What Is a 1099-R?

Form 1099-R is a tax document issued to savers that reports any distributions of retirement benefits, including withdrawals, rollovers, and conversions. 

Why Would You Receive a 1099-R?

If you received a distribution(s) of $10 or more from your retirement plan, you will get a Form 1099-R by January 31st the following year. These distributions may include but are not limited to:

  • Withdrawals taken during retirement 
  • Loans from your 401(k) that are considered distributions
  • Rollovers to another retirement account
  • Hardship withdrawals
  • Required minimum distributions (RMDs) once you reach a certain age
  • Early distribution for death or disability 
  • Corrective distributions
  • 402(g) distributions
  • QACA/EACA auto-enrollment reimbursements 

How to Read Your 1099-R

Correctly reading your 1099-R is essential for understanding its tax implications. Here's a brief overview of the key sections within the form:

  • Box 1 displays the total amount of money that was distributed or removed from your account before any taxes were applied.
  • Box 2a indicates the portion of your distribution that is subject to taxes, which includes any gains from investments. If part of your distribution was not taxable, this amount will differ from Box 1.
  • Box 2b “Taxable Amount Not Determined” checkbox is marked if you are unable to reasonably obtain the data needed to compute the taxable amount for box 2a. 
  • Box 2b “Total Distribution” checkbox is marked if the payment shown in box 1 is a total distribution—where the entire balance of the account is distributed within 1 tax year. If periodic or installment payments are made, mark this box is marked in the year the final payment is made.
  • Box 4 lists any federal income tax withheld from your distribution.
  • Box 5 indicates the non-taxable portion of your distribution, if applicable.
  • Box 7 contains code(s) describing the distribution type, with each code specifying a different scenario, such as a normal distribution. See a list of distribution codes and their explanations here

*Source: Internal Revenue Service (IRS), Form 1099-R.

For detailed guidance and information on the additional boxes, see the IRS’ Form 1099-R instructions or consult a tax professional.

When to Expect Your 1099-R

Your 1099-R should arrive by mail between January 16th and 31st, following the year you received distributions. If you take distributions in 2024, expect your 1099-R by January 31, 2025. If you do not receive it by February 15th, contact us at help@vestwell.com to verify your address and request a duplicate if needed.

What to Do if You Notice Something Wrong

If you notice any incorrect information on your 1099-R, contact Vestwell at help@vestwell.com or call us at 917.979.5358, ext 1. We can address any mistakes and issue a corrected form if necessary. 

If you have already filed your taxes with the incorrect information, you may need to file an amended return with Form 1040-X once you receive the corrected 1099-R.

If you need any additional support, please contact us at help@vestwell.com