eTax.com Form 1099-R Distribution

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If you’ve received retirement payments throughout the year from your pension, annuity, IRA or similar type of plan, you’ll receive a Form 1099-R as a report of the fund distribution.

After an employee retires or becomes disabled, he or she can begin receiving pension and annuity distributions. If the employee made contributions after-tax, only a portion of the retirement payments are subject to tax. On the other hand, contributions made pre-tax are normally entirely included in taxable income when distributed.

When a taxpayer chooses to redirect retirement funds from one account to another without paying the taxes, they are performing a rollover. Form 1099-R will specify any direct rollovers in box 7 with either G or H codes.

Any payments received prior to the taxpayer turning 59 ½ years of age are considered early distribution, and are subject to additional taxes. The government instills a 10% tax on early distributions in an effort to stray people away from using their retirement funds for other purposes. In addition to the federal government, early distributions may be subject to state penalties.

There are a few exceptions which may alter the installation of this 10% tax to the entire distribution amount. Some of these exceptions are: death, disability, medical expenses greater than 10% of your AGI, and an IRS levy.