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IRS Issues 2018 Version of Form 1099-R for Retirement Plan Distributions

EBIA  

EBIA  

IRS Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.) (2018) and Instructions (2018)

Form 1099-R

Instructions

The IRS has released the 2018 version of Form 1099-R and its instructions. Retirement plan administrators (including administrators of 401(k) plans) are required to report plan distributions on Form 1099-R, which they file with the IRS and deliver to the plan participant or beneficiary. While the 2018 form and instructions largely mirror the 2017 version, there are a few changes. Here are highlights:

  • New Distribution Codes. Form 1099-R includes new distribution codes for box 7, including new code M, which is used to report a qualified plan loan offset when a participant’s account balance is reduced to repay a plan loan upon severance from employment or termination of the plan.
  • Recharacterization of Conversions. The instructions specify that a conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made after December 31, 2017, cannot be recharacterized as having been made to a traditional IRA.
  • Disaster Distributions. The instructions note that special rules apply to retirement plan distributions made to employees affected by certain natural disasters that occurred in 2016 and 2017 (see, for example, our Checkpoint article). IRS Publication 976 is referenced as a source of additional information (see our Checkpoint article).

The form also contains a new box, and adds a distribution code, for recently added reporting obligations under Code § 6050Y in connection with “reportable death benefits” paid under certain life insurance contracts acquired by parties who have no substantial relationship with the insured apart from the life insurance.

EBIA Comment: All plan distributions of $10 or more that occurred in the previous calendar year must be reported to the IRS on Form 1099-R, generally by February 28, if filed on paper, or April 1, if filed electronically. (The IRS requires electronic filing of Form 1099-R if the plan administrator files 250 or more forms and encourages electronic filing even when filing fewer than 250 returns.) Copies must generally be provided to plan participants or beneficiaries by January 31. The Form 1099-R instruction booklet also addresses Form 5498, which is used by IRA custodians. For more information, see EBIA’s 401(k) Plans manual at Sections XIV.R (“Reporting Distributions on Form 1099-R”) and XV.H (“Special Hardship Rules for Disaster Relief”).

Contributing Editors: EBIA Staff.

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