IRS Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.) (2020); IRS Form 5498 (IRA Contribution Information) (2020); Instructions for Forms 1099-R and 5498 (2020)
The IRS has released the 2020 versions of Forms 1099-R and 5498, and their combined instructions. 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 within a qualified plan), and certain other IRA-related information, including fair market value and required minimum distributions. These versions of the forms will be filed with the IRS and furnished to distribution recipients and IRA owners and beneficiaries in 2021 for events occurring in 2020. Both forms have been updated for the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) (see our Checkpoint article), references to new Form 1040-SR have been added, and some terminology has been updated. Also, boxes on Form 1099-R for the FATCA filing requirement and the date of payment for certain reportable death benefits are now numbered, and the state and local tax items have been renumbered accordingly.
Here are highlights of the changes made to the instructions:
Distributions for Qualified Birth and Adoption. The instructions for Form 1099-R explain how to report qualified birth or adoption distributions authorized by the SECURE Act. And the instructions for Form 5498 add a new code BA to use when reporting repayments of such distributions in Boxes 14a and 14b.
Required Minimum Distributions (RMDs). The instructions for Form 5498 explain that the age for beginning RMDs has increased from 70-1/2 to 72 for taxpayers turning 70-1/2 after December 31, 2019.
Reportable Death Benefits. The instructions for Form 1099-R offer additional guidance regarding reportable death benefits paid in connection with certain life insurance contracts.
Nonqualified Plans. Reportable distributions from commercial annuities paid to nonemployees must be reported on new Form 1099-NEC (as opposed to Form 1099-MISC, which was used for 2019).
Other Updates. The instructions update the catch-up contribution limits and some references to relevant IRS guidance, and they identify other guidance that has not yet been updated to reflect the SECURE Act.
EBIA Comment: All qualified plan distributions of $10 or more in 2020 will have to be reported to the IRS on this version of Form 1099-R. The deadline for filing the 2020 Form 1099-R with the IRS will be March 1, 2021, for scannable paper filings, and March 31, 2021, 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. Copies must be provided to plan participants and beneficiaries by February 1, 2021. Form 5498 for 2020 generally must be filed and provided by June 1, 2021, but some information (regarding fair market value and required minimum distributions) must be furnished by February 1, 2021. 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.