IRS Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.) (2019); IRS Form 5498 (IRA Contribution Information) (2019); Instructions for Forms 1099-R and 5498 (2019)
The IRS has released the 2019 versions of Forms 1099-R and 5498. Form 1099-R is used to report designated distributions from retirement plans, annuities, IRAs, and other sources. Form 5498 is used to report contributions to IRAs, including deemed IRAs, and certain other IRA-related information, including fair market value and required minimum distributions. (“Deemed IRAs” are separate accounts or annuities within a qualified employer plan that satisfy the requirements of a traditional or Roth IRA and are treated only as IRAs, not as part of the qualified plan.) These versions of the forms will be filed with the IRS and furnished to distribution recipients and IRA owners and beneficiaries in 2020. Both forms are substantially similar to their 2018 versions, with dates updated and some obsolete instructions removed (e.g., Form 5498 no longer refers to “qualified settlement income” or to Form 1040A). Only minor changes were made to the combined instructions. Here are highlights:
Escheat of Unclaimed IRA Assets. The instructions for Form 1099-R reflect a 2018 revenue ruling (Rev. Rul. 2018-17) indicating that payments after 2018 from IRAs to state unclaimed property funds must be reported on Form 1099-R. The instructions do not, however, reflect a subsequent IRS notice (Notice 2018-90) extending the transition relief for this requirement. Under that extension, the IRS won’t treat a person as failing to comply with respect to payments made before 2020 or, if earlier, the date it becomes reasonably practicable to comply.
Online Completion of Forms. The instructions explain that the copies of these forms that must be furnished to recipients other than the IRS (copies B, C, D, 1, and 2) can now be completed online at irs.gov. Paper copies sent to the IRS, however, must still be prepared on the scannable (red ink) versions of Copy A obtained from the IRS. Filers that try to submit a printed copy of the online version may be penalized.
Qualified Plan Loan Offsets. The instructions now offer a more complete description of qualified plan loan offset amounts and instruct filers to identify these distributions by entering Code M in box 7.
Other Updates. Other changes cite recent guidance regarding the Employee Plans Compliance Resolution System (EPCRS) (see our Checkpoint article) and the safe harbor rollover explanations (see our Checkpoint article), and update the IRA contribution limits. Also, the instructions for Form 5498 box 13 have been supplemented to better explain the qualified plan loan offset and disaster distribution situations that could result in delayed rollovers.
EBIA Comment: All qualified plan distributions of $10 or more in 2019 will have to be reported to the IRS on this version of Form 1099-R. The deadline for IRS filing of the 2019 Form 1099-R will be February 28, 2020, for scannable paper filings, and March 31, 2020, for electronic filings. The IRS requires electronic filing of Form 1099-R if the plan administrator files 250 or more of these forms, but it encourages electronic filing even if not required. (See the General Instructions for more information about electronic filing. Note that this differs from the way the 250-return threshold is applied for Form 8955-SSA (see our Checkpoint article).) But copies must be provided to plan participants and beneficiaries by January 31, 2020. Form 5498 for 2019 generally must be filed and provided by June 1, 2020, but some information (regarding fair market value and required minimum distributions) must be furnished by January 31, 2020. For more information, see EBIA’s 401(k) Plans manual at Sections VIII.G (“After-Tax and Deemed IRA Contributions”) and XIV.R (“Reporting Distributions on Form 1099-R”).
Contributing Editors: EBIA Staff.