Table of Contents
- Specific Instructions for Form 1099-R
- Designated Roth Account Distributions
- IRA Distributions
- IRA Revocation or Account Closure
- Deductible Voluntary Employee Contributions (DECs)
- Direct Rollovers
- Explanation to Recipients Before Eligible Rollover Distributions (Section 402(f) Notice)
- Transfers
- Corrective Distributions
- Excess Annual Additions Under Section 415
- Failing the ADP or ACP Test After a Total Distribution
- Loans Treated as Distributions
- Permissible Withdrawals Under Section 414(w)
- Missing Participants
- Corrected Form 1099-R
- Filer
- Beneficiaries
- Alternate Payee Under a Qualified Domestic Relations Order (QDRO)
- Nonresident Aliens
- Statements to Recipients
- Account Number
- Box 1. Gross Distribution
- Box 2a. Taxable Amount
- Box 2b. Taxable Amount not Determined
- Box 2b. Total Distribution
- Box 3. Capital Gain (Included in Box 2a)
- Box 4. Federal Income Tax Withheld
- Box 5. Employee Contributions/Designated Roth Contributions or Insurance Premiums
- Box 6. Net Unrealized Appreciation (NUA) in Employer's Securities
- Box 7. Distribution Code(s)
- Box 8. Other
- Box 9a. Your Percentage of Total Distribution
- Box 9b. Total Employee Contributions
- Boxes 10-15. State and Local Information
- Specific Instructions for Form 5498
- Alternative one.
- Alternative two.
- Electronic filing.
- Reporting to the IRS.
- Account Number
- Blank Box
- Box 1. IRA Contributions (Other Than Amounts in Boxes 2-4 and 8-10)
- Box 2. Rollover Contributions
- Box 3. Roth IRA Conversion Amount
- Box 4. Recharacterized Contributions
- Box 5. Fair Market Value of Account
- Box 6. Life Insurance Cost Included in Box 1
- Box 7. Checkboxes
- Box 8. SEP Contributions
- Box 9. SIMPLE Contributions
- Box 10. Roth IRA Contributions
- Box 11. Check if RMD for 2009
File Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., for each person to whom you have made a designated distribution or are treated as having made a distribution of $10 or more from profit-sharing or retirement plans, any IRAs, annuities, pensions, insurance contracts, survivor income benefit plans, permanent and total disability payments under life insurance contracts, charitable gift annuities, etc.
Also, report on Form 1099-R death benefit payments made by employers that are not made as part of a pension, profit-sharing, or retirement plan. See box 1 on page 7.
Reportable disability payments made from a retirement plan must be reported on Form 1099-R.
Generally, do not report payments subject to withholding of social security and Medicare taxes on this form. Report such payments on Form W-2, Wage and Tax Statement.
Generally, do not report amounts totally exempt from tax, such as workers' compensation and Department of Veterans Affairs (VA) payments. However, if part of the distribution is taxable and part is nontaxable, report the entire distribution.
There is no special reporting for qualified HSA funding distributions described in section 408(d)(9) or for the payment of qualified health and long-term care insurance premiums for retired public safety officers described in section 402(l).
At the time these instructions went to print, the IRS and Treasury were considering issuing guidance that would modify reporting of section 404(k) dividends for 2009.
An employer offering a section 401(k) or 403(b) plan may allow participants to contribute all or a portion of the elective deferrals they are otherwise eligible to make to a separate designated Roth account established under the plan. Contributions made under a section 401(k) plan must meet the requirements of Regulations section 1.401(k)-1(f) (Regulations section 1.403(b)-3(c) for a section 403(b) plan). Under the terms of the section 401(k) plan or section 403(b) plan the designated Roth account must meet the requirements of section 402A.
A separate Form 1099-R must be used to report a distribution from a designated Roth account.
For deemed IRAs under section 408(q), use the rules that apply to traditional IRAs or Roth IRAs as applicable. SEP IRAs and SIMPLE IRAs, however, may not be used as deemed IRAs.
If a traditional or Roth IRA is revoked during its first 7 days (under Regulations section 1.408-6(d)(4)(ii)) or is closed at any time by the IRA trustee or custodian due to a failure of the taxpayer to satisfy the Customer Identification Program requirements described in section 326 of the U.S. Patriot Act, the distribution from the IRA must be reported. In addition, Form 5498, IRA Contribution Information, must be filed to report any regular, rollover, Roth IRA conversion, SEP IRA, or SIMPLE IRA contribution to an IRA that is subsequently revoked or closed by the trustee or custodian.
If a regular contribution is made to a traditional or Roth IRA that later is revoked or closed, and distribution is made to the taxpayer, enter the gross distribution in box 1. If no earnings are distributed, enter 0 (zero) in box 2a and Code 8 in box 7 for a traditional IRA and Code J for a Roth IRA. If earnings are distributed, enter the amount of earnings in box 2a. For a traditional IRA, enter Codes 1 and 8, if applicable, in box 7; for a Roth IRA, enter Codes J and 8, if applicable. These earnings could be subject to the 10% early distribution tax under section 72(t). If a rollover contribution is made to a traditional or Roth IRA that later is revoked or closed, and distribution is made to the taxpayer, enter in boxes 1 and 2a of Form 1099-R the gross distribution and the appropriate code in box 7 (Code J for a Roth IRA). Follow this same procedure for a transfer from a traditional or Roth IRA to another IRA of the same type that later is revoked or closed. The distribution could be subject to the 10% early distribution tax under section 72(t).
If an IRA conversion contribution is made to a Roth IRA that later is revoked or closed, and a distribution is made to the taxpayer, enter the gross distribution in box 1 of Form 1099-R. If no earnings are distributed, enter 0 (zero) in box 2a and Code J in box 7. If earnings are distributed, enter the amount of the earnings in box 2a and Code J in box 7. These earnings could be subject to the 10% early distribution tax under section 72(t).
If an employer SEP (simplified employee pension) IRA or SIMPLE (savings incentive match plan for employees) IRA plan contribution is made and the SEP IRA or SIMPLE IRA is revoked by the employee or is closed by the trustee or custodian, report the distribution as fully taxable.
For more information on IRAs that have been revoked, see Rev. Proc. 91-70, 1991-2 C.B. 899.
If you are reporting a total distribution from a plan that includes a distribution of DECs, file a separate Form 1099-R to report the distribution of DECs. Report the distribution of DECs in boxes 1 and 2a on the separate Form 1099-R. However, for the direct rollover (explained below) of funds that include DECs, a separate Form 1099-R is not required to report the direct rollover of the DECs.
You must report a direct rollover of an eligible rollover distribution. A direct rollover is the direct payment of the distribution from a qualified plan (including a governmental section 457(b) plan) or section 403(b) plan to a traditional IRA or other eligible retirement plan. For additional rules regarding the treatment of direct rollovers from designated Roth accounts, see Designated Roth accounts below. A direct rollover may be made for the employee, for the employee's surviving spouse, for the spouse or former spouse who is an alternate payee under a qualified domestic relations order (QDRO) or for a nonspouse designated beneficiary, in which case the direct rollover can only be made to an IRA. If the distribution is paid to the surviving spouse, the distribution is treated in the same manner as if the spouse were the employee. See Part V of Notice 2007-7 on page 395 of Internal Revenue Bulletin 2007-5 at www.irs.gov/pub/irs-irbs/irb07-05.pdf for guidance on direct rollovers by nonspouse designated beneficiaries.
An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the employee (including net unrealized appreciation (NUA)) from a qualified plan (including a governmental section 457(b) plan) or a section 403(b) plan except:
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One of a series of substantially equal periodic payments made at least annually over:
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The life of the employee or the joint lives of the employee and the employee's designated beneficiary,
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The life expectancy of the employee or the joint life and last survivor expectancy of the employee and the employee's designated beneficiary, or
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A specified period of 10 years or more.
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A required minimum distribution (under section 401(a)(9)). A plan administrator is permitted to assume there is no designated beneficiary for purposes of determining the minimum distribution.
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Elective deferrals (under section 402(g)(3)), employee contributions, and earnings on each returned because of the section 415 limits.
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Corrective distributions of excess deferrals (under section 402(g)) and earnings.
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Corrective distributions of excess contributions under a qualified cash or deferred arrangement (under section 401(k)) and excess aggregate contributions (under section 401(m))
and earnings. -
Loans treated as deemed distributions (under section 72(p)). But plan loan offset amounts can be eligible rollover distributions. See Regulations section 1.402(c)-2, Q/A-9.
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Section 404(k) dividends.
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Cost of current life insurance protection.
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Distributions to a payee other than the employee, the employee's surviving spouse, or a spouse or former spouse who is an alternate payee under a QDRO.
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Any hardship distribution.
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A permissible withdrawal under section 414(w).
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Prohibited allocations of securities in an S corporation that are treated as deemed distributions.
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Distributions of premiums for accident or health insurance under Regulations section 1.402(a)-1(e).
Amounts paid under an annuity contract purchased for and distributed to a participant under a qualified plan can qualify as eligible rollover distributions. See Regulations section 1.402(c)-2, Q/A-10.
Internal Revenue Bulletin 2005-3 at www.irs.gov/pub/irs-irbs/irb05-03.pdf.
For information on distributions of amounts attributable to rollover contributions separately accounted for by an eligible retirement plan and if permissible timing restrictions apply, see Rev. Rul. 2004-12 which is on page 478 of Internal Revenue Bulletin 2004-7 at www.irs.gov/pub/irs-irbs/irb04-07.pdf.
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A rollover contribution to a Roth IRA from another IRA that meets the requirements of section 408(d)(3) or
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A rollover contribution to a Roth IRA from an eligible retirement plan (other than an IRA) that meets the requirements of section 408A(e)(2)(B).
The requirements of section 402(f) do not apply to direct rollovers by nonspouse designated beneficiaries.
For qualified plans, section 403(b) plans, and governmental section 457(b) plans, the plan administrator must provide to each recipient of an eligible rollover distribution an explanation using either a written paper document or an electronic medium (section 402(f) notice). The explanation must be provided no more than 90 days (as much as 180 days for plan years that begin after December 31, 2006) and no fewer than 30 days before making an eligible rollover distribution or before the annuity starting date. However, if the recipient who has received the section 402(f) notice affirmatively elects a distribution, you will not fail to satisfy the timing requirements merely because you make the distribution fewer than 30 days after you provided the notice as long as you meet the requirements of Regulations section 1.402(f)-1, Q/A-2. The electronic section 402(f) notice must meet the consumer consent requirements as provided in Regulations section 1.401(a)-21(b).
The notice must explain the rollover rules, the special tax treatment for lump-sum distributions, the direct rollover option (and any default procedures), the mandatory 20% withholding rules, and an explanation of how distributions from the plan to which the rollover is made may have different restrictions and tax consequences than the plan from which the rollover is made. The notice and summary are permitted to be sent either as a written paper document or through an electronic medium reasonably accessible to the recipient; see Regulations section 1.402(f)-1, Q/A-5.
For periodic payments that are eligible rollover distributions, you must provide the notice before the first payment and at least once a year as long as the payments continue. For section 403(b) plans, the payer must provide an explanation of the direct rollover option within the time period described above or some other reasonable period of time.
Notice 2002-3, which is on page 289 of Internal Revenue Bulletin 2002-2 at www.irs.gov/pub/irs-irbs/irb02-02.pdf, contains model notices that the plan administrator can use to satisfy the notice requirements.
Notice 2002-3 has not yet been updated for requirements related to plans that accept designated Roth account contributions. For distributions from designated Roth accounts, the section 402(f) notice must contain the rollover and taxation rules for the distribution of designated Roth contributions.
The notice also has not yet been updated for the requirements of the Pension Protection Act of 2006.
Generally, do not report a transfer between trustees or issuers that involves no payment or distribution of funds to the participant, including a trustee-to-trustee transfer from one IRA to another, transfers from one section 403(b) plan to another, or for the purchase of permissive service credit under section 403(b)(13) or 457(e)(17). However, you must report:
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Recharacterized IRA contributions;
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Roth IRA conversions; and
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Direct rollovers from qualified plans (including governmental section 457(b) plans) and section 403(b) plans, including any direct rollovers from such plans that are qualified rollover contributions described in section 408A(e).
You must report on Form 1099-R corrective distributions of excess deferrals, excess contributions and excess aggregate contributions under section 401(a) plans, section 401(k) cash or deferred arrangements, section 403(a) annuity plans, section 403(b) salary reduction agreements, and salary reduction simplified employee pensions (SARSEPs) under section 408(k)(6). Excess contributions that are recharacterized under a section 401(k) plan are treated as distributed. Corrective distributions of an excess plus earnings are reportable on Form 1099-R for the year of the distribution regardless of when the distribution is taxable to the participant. Enter Code 8, P, or in some cases D, in box 7 (with Code B if applicable) to designate the distribution and the year it is taxable.
Use a separate Form 1099-R to report a corrective distribution from a designated Roth account.
The total amount of the elective deferral is reported in box 12 of Form W-2. See the Instructions for Forms W-2 and W-3 for more information.
If the excess and the earnings are taxable in 2 different years, you must issue two Forms 1099-R to designate the year each is taxable.
You must advise the plan participant at the time of the distribution of the year(s) in which the distribution is taxable and that it may be necessary to file an amended return for a prior tax year.
For more information about reporting corrective distributions see: the Guide to Distribution Codes on pages 11 and 12; Notice 89-32, 1989-1 C.B. 671; Notice 88-33, 1988-1 C.B. 513; Notice 87-77, 1987-2 C.B. 385; and the Regulations under sections 401(k), 401(m), 402(g), and 457.
You must report on Form 1099-R distributions made under Regulations section 1.415-6(b)(6)(iv) of elective deferrals or a return of employee contributions (and gains attributable to such elective deferrals or employee contributions) to reduce excess annual additions arising from the allocation of forfeitures, a reasonable error in estimating a participant's compensation, or a reasonable error in determining the amount of elective deferrals that may be made for an individual under the limits of section 415.
Such distributions are not eligible rollover distributions although they are subject to federal income tax withholding under section 3405. They are not subject to social security, Medicare, or Federal Unemployment Tax Act (FUTA) taxes. In addition, such distributions are not subject to the 10% early distribution tax under section 72(t).
You may report the distribution of elective deferrals (other than designated Roth account contributions) and employee contributions
(and gains
attributable to such elective deferrals and employee contributions) on the same Form 1099-R. However, if you made other distributions
during the year,
report them on a separate Form 1099-R. Because the distribution of elective deferrals (other than designated Roth account
contributions) is fully
taxable in the year distributed (no part of the distribution is a return of the investment in the contract), report the total
amount of the
distribution in boxes 1 and 2a. Leave box 5 blank, and enter Code E in box 7. For a return of employee contributions (or designated
Roth account
contributions) plus gains, enter the gross distribution in box 1, the gains attributable to the employee contributions (or
designated Roth account
contributions) being returned in box 2a, and the employee contributions (or designated Roth account contributions) being returned
in box 5. Enter Code
E in box 7. For more information, see Rev. Proc. 92-93, 1992-2
C.B. 505.
New regulations under section 415, effective for limitation years beginning after June 30, 2007, do not contain procedures for reducing excess annual additions. However, the correction and reporting procedures explained earlier can be used for correcting excess annual additions in 2008 under the Employee Plans Compliance Resolution System (EPCRS), as explained in Rev. Proc. 2006-27. For additional information, see Rev. Proc. 2006-27 which is on page 945 of Internal Revenue Bulletin 2006-22 at www.irs.gov/pub/irs-irbs/irb06-22.pdf.
A corrective distribution under the EPCRS to the participant of contributions to a section 403(b) plan (plus gains attributable to such contributions) that were in excess of the limits under section 415 is treated the same as corrective distributions of elective deferrals to satisfy the limits under section 415. It is taxable to the participant in the year of distribution as described above.
If you make a total distribution in 2008 and file a Form 1099-R with the IRS and then discover in 2009 that the plan failed either the section 401(k)(3) actual deferral percentage (ADP) test for 2008 and you compute excess contributions or the section 401(m)(2) actual contribution percentage (ACP) test and you compute excess aggregate contributions, you must recharacterize part of the total distribution as excess contributions or excess aggregate contributions. First, file a CORRECTED Form 1099-R for 2008 for the correct amount of the total distribution (not including the amount recharacterized as excess contributions or excess aggregate contributions). Second, file a new Form 1099-R for 2008 for the excess contributions or excess aggregate contributions and allocable earnings.
To avoid a late filing penalty if the new Form 1099-R is filed after the due date, enter in the bottom margin of Form 1096, Annual Summary and Transmittal of U.S. Information Returns, the words “Filed To Correct Excess Contributions.”
You must also issue copies of the Forms 1099-R to the plan participant with an explanation of why these new forms are being issued.
A loan from a qualified plan under sections 401(a) and 403(a) and (b), and a plan maintained by the United States, a state or political subdivision, or any of its subsidiary agencies made to a participant or beneficiary is not treated as a distribution from the plan if the loan satisfies the following requirements.
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The loan is evidenced by an enforceable agreement,
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The agreement specifies that the loan must be repaid within 5 years, except for a principal residence,
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The loan must be repaid in substantially level installments (at least quarterly), and
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The loan amount does not exceed the limits in section 72(p)(2)(A) (maximum limit is equal to the lesser of 50% of the vested account balance or $50,000).
Certain exceptions, cure periods, and suspension of the repayment schedule may apply.
The loan agreement must specify the amount of the loan, the term of the loan, and the repayment schedule. The agreement may include more than one document.
If a loan fails to satisfy 1, 2, or 3, the balance of the loan is a deemed distribution. The distribution may occur at the time the loan is made or later if the loan is not repaid in accordance with the repayment schedule.
If a loan fails to satisfy 4 at the time the loan is made, the amount that exceeds the amount permitted to be loaned is a deemed distribution.
or 415(c)(2)(B). For a deemed distribution that was reported on Form 1099-R but was not repaid, the deemed distribution does not increase the participant's basis. If a participant's accrued benefit is reduced (offset) to repay a loan, the amount of the account balance that is offset against the loan is an actual distribution. Report it as you would any other actual distribution. Do not enter Code L in box 7.
For permissible withdrawals from an eligible automatic contribution arrangement under section 414(w):
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The distribution (except to the extent the distribution consists of designated Roth contributions) are included in the employee's gross income in the year distributed;
-
Report principal and earnings in boxes 1 and 2a except, in the case of a distribution from a designated Roth account, report only earnings in box 2a;
-
The distribution is not subject to the 10% additional tax, indicated by reporting Distribution Code 2 in box 7; and
-
The distribution must be elected by the employee no later than 90 days after the first elective contribution, as specified in Proposed Regulations section 1.414(w)-1(c)(2).
If the distribution is from a designated Roth account, enter Code B as well as Code 2 in box 7.
The IRS administers a letter-forwarding program that could help plan administrators contact missing retirement plan participants (or possibly their beneficiaries). To inform individuals of their rights to benefits under a retirement plan, the IRS will forward letters from plan administrators to the missing individuals if the administrators provide the names and social security numbers (SSNs) of the missing individuals. However, the IRS cannot disclose individuals' addresses or give confirmation of letter delivery. All undelivered letters will be destroyed. For further information, see Rev. Proc. 94-22, 1994-1 C.B. 608, or contact your IRS office.
If you filed a Form 1099-R with the IRS and later discover that there is an error on it, you must correct it as soon as possible. For example, if you transmit a direct rollover and file a Form 1099-R with the IRS reporting that none of the direct rollover is taxable by entering 0 (zero) in box 2a, and you then discover that part of the direct rollover consists of required minimum distributions under section 401(a)(9), you must file a corrected Form 1099-R. See part H in the 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G or Pub. 1220, if filing electronically.
The payer, trustee, or plan administrator must file Form 1099-R using the same name and employer identification number (EIN) used to deposit any tax withheld and to file Form 945, Annual Return of Withheld Federal Income Tax.
If you make a distribution to a beneficiary, trust, or estate, prepare Form 1099-R using the name and TIN of the beneficiary, trust, or estate, not that of the decedent. If there are multiple beneficiaries, report on each Form 1099-R only the amount paid to the beneficiary whose name appears on the Form 1099-R, and enter the percentage in box 9a, if applicable.
Distributions to an alternate payee who is a spouse or former spouse of the employee under a QDRO are reportable on Form 1099-R using the name and TIN of the alternate payee. If the alternate payee under a QDRO is a nonspouse, enter the name and TIN of the employee. However, this rule does not apply to IRAs; see Transfer of an IRA to spouse on page 4.
If income tax is withheld under section 3405 on any distribution to a nonresident alien, report the distribution and withholding on Form 1099-R. Also file Form 945 to report the withholding. See the Presumption Rules in part S of the 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G.
However, any payments to a nonresident alien from any trust under section 401(a), any annuity plan under section 403(a), any
annuity, custodial
account, or retirement income account under section 403(b), or any IRA account under section 408(a) or (b) are subject to
withholding under section
1441. Report the distribution and withholding on Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign
Persons, and Form 1042-S,
Foreign Person's U.S. Source Income Subject
to Withholding.
If you are required to file Form 1099-R, you must furnish a statement to the recipient. For more information about the requirement to furnish a statement to each recipient, see part M in the 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G.
Do not enter a negative amount in any box on
Form 1099-R.
The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-R.
Additionally, the
IRS encourages you to designate an account number for all Forms 1099-R that you file. See part L in the 2008 General Instructions
for Forms 1099,
1098, 5498,
and W-2G.
Enter the total amount of the distribution before income tax or other deductions were withheld. Include direct rollovers, IRA rollovers to accepting employer plans, premiums paid by a trustee or custodian for the cost of current life or other insurance protection, and the gross amount of any IRA distribution, including a recharacterization and a Roth IRA conversion. Also include in this box distributions to plan participants from governmental section 457(b) plans. However, in the case of a distribution by a trust representing certificates of deposit (CDs) redeemed early, report the net amount distributed. Also, see box 6 on page 9.
Include in this box the value of U.S. Savings Bonds distributed from a plan. Enter the appropriate taxable amount in box 2a. Furnish a statement to the plan participant showing the value of each bond at the time of distribution. This will provide him or her with the information necessary to figure the interest income on each bond when it is redeemed.
Include in box 1 amounts distributed from a qualified retirement plan for which the recipient elects to pay health insurance premiums under a cafeteria plan or that are paid directly to reimburse medical care expenses incurred by the recipient (see Rev. Rul. 2003-62 on page 1034 of Internal Revenue Bulletin 2003-25 at www.irs.gov/pub/irs-irbs/irb03-25.pdf). Also include this amount in box 2a.
In addition to reporting distributions to beneficiaries of deceased employees, report here any death benefit payments made by employers that are not made as part of a pension, profit-sharing, or retirement plan. Also enter these amounts in box 2a; enter Code 4 in box 7.
Do not report accelerated death benefits on Form 1099-R. Report them on Form 1099-LTC, Long-Term Care and Accelerated Death Benefits.
For section 1035 exchanges that are reportable on Form 1099-R, enter the total value of the contract in box 1, 0 (zero) in box 2a, the total premiums paid in box 5, and Code 6 in box 7.
When determining the taxable amount to be entered in box 2a, do not reduce the taxable amount by any portion of the $3,000 exclusion for which the participant may be eligible as a payment of qualified health and long-term care insurance premiums for retired public safety officers under section 402(l).
Generally, you must enter the taxable amount in box 2a. However, if you are unable to reasonably obtain the data needed to compute the taxable amount, leave this box blank. Do not enter excludable or tax-deferred amounts reportable in boxes 5, 6, and 8.
For a direct rollover (other than a qualified rollover contribution) from a qualified plan (including a governmental section 457(b) plan) or section 403(b) plan, for a distribution from a conduit IRA that is payable to the trustee of or is transferred to an employer plan, for an IRA recharacterization, or for a nontaxable section 1035 exchange of life insurance, annuity, or endowment contracts, enter 0 (zero) in box 2a.
Notice 98-2.
on page 3.
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Box 1, $5,000 as the gross distribution;
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Box 2a, $300 as the taxable amount;
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Box 4, $60 ($300 x 20%) as the withholding on the earnings portion of the distribution;
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Box 5, $4,700 as the designated Roth contribution basis (nontaxable amount);
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Box 7, Distribution Code B; and
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The first year of the 5-taxable-year period in the box to the left of box 10.
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Box 1, $5,000 as the gross distribution;
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Box 2a, 0 (zero) as the taxable amount;
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Box 4, no entry;
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Box 5, $4,700 as the designated Roth contribution basis (nontaxable amount);
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Box 7, Distribution Code H; and
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The first year of the 5-taxable-year period in the box to the left of box 10.
this box. For a distribution of contributions plus earnings from an IRA before the due date of the return under section 408(d)(4), report the gross distribution in box 1, only the earnings in box 2a, and enter Code 8 or P, whichever is applicable, in box 7. Enter Code 1 or 4 also, if applicable. For a distribution of excess contributions without earnings after the due date of the individual's return under section 408(d)(5), leave box 2a blank, and check the “Taxable amount not determined” checkbox in box 2b. Use Code 1 or 7 in box 7 depending on the age of the participant. For a traditional IRA and a SEP IRA rolled over to an accepting employer plan, enter the gross amount in box 1, 0 (zero) in box 2a, and Code G in box 7.
Enter an “X” in this box only if you are unable to reasonably obtain the data needed to compute the taxable amount. If you check this box, leave box 2a blank. Except for IRAs, make every effort to compute the taxable amount. However, see IRA Revocation or Account Closure on page 2 and Corrective Distributions on page 4.
Enter an “X” in this box only if the payment shown in box 1 is a total distribution. A total distribution is one or more distributions within 1 tax year in which the entire balance of the account is distributed. If periodic or installment payments are made, mark this box in the year the final payment is made.
If any amount is taxable as a capital gain, report it in box 3.
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The month in which the employee received a lump-sum distribution under the plan;
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For an employee, other than a self-employed person or owner-employee, the month in which the employee separates from service;
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The month in which the employee dies; or
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For a self-employed person or owner-employee, the first month in which the employee becomes disabled within the meaning of section 72(m)(7).
Example for Computing Amount Eligible for Capital Gain Election (See Box 3.) | ||
Step 1. Total Taxable Amount | ||
A. Total distribution | XXXXX | |
B. Less: | ||
1. Current actuarial value of any annuity | XXXX | |
2. Employee contributions or designated Roth contributions (minus any amounts previously distributed that were not includible in the employee's gross income) | XXXX | |
3. Net unrealized appreciation in the value of any employer securities that was a part of the lump-sum distribution. | XXXX | |
C. Total of lines 1 through 3 | XXXXX | |
D. Total taxable amount. Subtract line C from line A. | XXXXX | |
Step 2. Capital Gain |
Total taxable amount |
Months of active
participation before 1974 |
||
Line D | X | _____________________ | = Capital gain |
Total months of active
participation |
Enter any federal income tax withheld. This withholding under section 3405 is subject to deposit rules and the withholding tax return is Form 945. Backup withholding does not apply. See Pub. 15-A, Employer's Supplemental Tax Guide, and the Instructions for Form 945 for more withholding information.
Even though you may be using Code 1 in box 7 to designate an early distribution subject to the 10% additional tax specified
in section 72(q), (t),
or (v), you are not required to withhold
that tax.
The amount withheld cannot be more than the sum of the cash and the FMV of property (excluding employer securities) received in the distribution. If a distribution consists solely of employer securities and cash ($200 or less) in lieu of fractional shares, no withholding is required.
To determine your withholding requirements for any designated distribution under section 3405, you must first determine whether the distribution is an eligible rollover distribution. See Direct Rollovers on page 3 for a discussion of eligible rollover distributions. If the distribution is not an eligible rollover distribution, the rules for periodic payments or nonperiodic distributions apply. For purposes of withholding, distributions from any IRA are not eligible rollover distributions.
satisfy the withholding on the employer securities or plan loan offset amount. The payer is required to withhold 20% of eligible rollover distributions from a qualified plan's distributed annuity and on eligible rollover distributions from a governmental section 457(b) plan. Any NUA excludable from gross income under section 402(e)(4) is not included in the amount of any eligible rollover distribution that is subject to 20% withholding. You are not required to withhold 20% of an eligible rollover distribution that, when aggregated with other eligible rollover distributions made to one person during the year, is less
than $200.
give you Form W-4, Employee's Withholding Allowance Certificate.
Enter the employee's contributions to a profit-sharing or retirement plan, designated Roth account contributions, or insurance premiums that the employee may recover tax free this year. The entry in box 5 may include any of the following: (a) designated Roth account contributions or contributions actually made by the employee over the years under the retirement or profit-sharing plan that were required to be included in the income of the employee when contributed (after-tax contributions), (b) contributions made by the employer but considered to have been contributed by the employee under section 72(f), (c) the accumulated cost of premiums paid for life insurance protection taxable to the employee in previous years and in the current year under Regulations section 1.72-16 (cost of current life insurance protection) (only if the life insurance contract itself is distributed), and (d) premiums paid on commercial annuities. Also report after-tax contributions directly rolled over to an IRA. Do not include contributions to any DEC, section 401(k) plan, or any other contribution to a retirement plan that was not an after-tax contribution.
Generally, for qualified plans, section 403(b) plans, and nonqualified commercial annuities, enter in box 5 the employee contributions or insurance premiums recovered tax free during the year based on the method you used to determine the taxable amount to be entered in box 2a. On a separate Form 1099-R, include the portion of the employee's basis that has been distributed from a designated Roth account. See the Examples in the instructions for box 2a on page 7.
If periodic payments began before 1993, you are not required to, but you are encouraged to, report in box 5.
If you made periodic payments from a qualified plan and the annuity starting date is after November 18, 1996, you must use the simplified method to figure the tax-free amount each year. See Annuity starting date in 1998 or later on page 7.
If a total distribution is made, the total employee contributions or insurance premiums available to be recovered tax free must be shown only in box 5. If any previous distributions were made, any amount recovered tax free in prior years must not appear in box 5.
If you are unable to reasonably obtain the data necessary to compute the taxable amount, leave boxes 2a and 5 blank, and check the first box in box 2b.
For more information, see Rev. Proc. 92-86, 1992-2 C.B. 495 and section 72(d).
For reporting charitable gift annuities, see Charitable gift annuities on page 7.
Use this box if a distribution from a qualified plan (except a qualified distribution from a designated Roth account) includes securities of the employer corporation (or a subsidiary or parent corporation) and you can compute the NUA in the employer's securities. Enter all the NUA in employer securities if this is a lump-sum distribution. If this is not a lump-sum distribution, enter only the NUA in employer securities attributable to employee contributions. See Regulations section 1.402(a)-1(b) for the determination of the NUA. Also see Notice 89-25, Q/A-1, 1989-1 C.B. 662. Include the NUA in box 1 but not in box 2a. You do not have to complete this box for a direct rollover.
Enter an “X” in the IRA/SEP/SIMPLE checkbox if the distribution is from a traditional IRA, SEP IRA, or SIMPLE IRA. It is not necessary to check the box for a distribution from a Roth IRA or for an IRA recharacterization.
Enter the current actuarial value of an annuity contract that is part of a lump-sum distribution. Do not include this item in boxes 1 and 2a.
To determine the value of an annuity contract, show the value as an amount equal to the current actuarial value of the annuity contract, reduced by an amount equal to the excess of the employee's contributions over the cash and other property (not including the annuity contract) distributed.
If an annuity contract is part of a multiple recipient lump-sum distribution, enter in box 8, along with the current actuarial value, the percentage of the total annuity contract each Form 1099-R represents.
If this is a total distribution and it is made to more than one person, enter the percentage received by the person whose name appears on Form 1099-R. You need not complete this box for any IRA distributions or for a direct rollover.
You are not required to enter the total employee contributions or designated Roth account contributions in box 9b. However, because this information may be helpful to the recipient, you may choose to report them.
If you choose to report the total employee contributions or designated Roth account contributions, do not include any amounts recovered tax free in prior years. For a total distribution, report the total employee contributions or designated Roth account contributions in box 5 rather than in box 9b.
These boxes and Copies 1 and 2 are provided for your convenience only and need not be completed for the IRS. Use the state and local information boxes to report distributions and taxes for up to two states or localities. Keep the information for each state or locality separated by the broken line. If state or local income tax has been withheld on this distribution, you may enter it in boxes 10 and 13, as appropriate. In box 11, enter the abbreviated name of the state and the payer's state identification number. The state number is the payer's identification number assigned by the individual state. In box 14, enter the name of the locality. In boxes 12 and 15, you may enter the amount of the state or local distribution. Copy 1 may be used to provide information to the state or local tax department. Copy 2 may be used as the recipient's copy in filing a state or local income tax return.
Guide to Distribution Codes | ||
---|---|---|
Distribution Codes | Explanations | *Used with code ...(if applicable) |
1—Early distribution, no known exception. | Use Code 1 only if the employee/taxpayer has not reached age 59½, and you do not know if any of the exceptions under Distribution Code 2, 3, or 4 apply. Use Code 1 even if the distribution is made for medical expenses, health insurance premiums, qualified higher education expenses, or a first-time home purchase under section 72(t)(2)(B), (D), (E), or (F). Code 1 must also be used even if a taxpayer is 591/ or older and he or she modifies a series of substantially equal periodic payments under section 72(q), (t), or (v) prior to the end of the 5-year period. | 8, B, D, L, or P |
2—Early distribution, exception applies. |
Use Code 2 only if the employee/taxpayer has not reached age 59½ and the distribution is:
|
8, B, D, or P |
3—Disability. | For these purposes, see section 72(m)(7). | None |
4—Death. | Use Code 4 regardless of the age of the employee/taxpayer to indicate payment to a decedent's beneficiary, including an estate or trust. Also use it for death benefit payments made by an employer but not made as part of a pension, profit-sharing, or retirement plan. | 8, A, B, D, G, H, L, or P |
5—Prohibited transaction. | Use Code 5 if there was a prohibited (improper) use of the account. Code 5 means the account is no longer an IRA. | None |
6—Section 1035 exchange. | Use Code 6 to indicate the tax-free exchange of life insurance, annuity, or endowment contracts under section 1035. | None |
7—Normal distribution. |
Use Code 7: (a) for a normal distribution from a plan, including a traditional IRA, section 401(k), or section 403(b) plan,
if the
employee/taxpayer is at least age 59½, (b) for a Roth IRA conversion or reconversion if the participant is at least age 59½,
and (c) to report a distribution from a life insurance, annuity, or endowment contract and for reporting income from a failed
life insurance
contract under sections 7702(g) and (h). See Rev. Rul. 91-17, 1991-1 C.B. 190. Use Code 7 with Code A, if applicable. Generally,
use Code 7 if no
other code applies. Do not use Code 7 for a Roth IRA.
Note: Code 1 must be used even if a taxpayer is 59½ or older and he or she modifies a series of substantially equal periodic payments under section 72(q), (t), or (v) prior to the end of the 5-year period. |
A |
8—Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2008. | Use Code 8 for an IRA distribution under section 408(d)(4), unless Code P applies. Also use this code for corrective distributions of excess deferrals, excess contributions, and excess aggregate contributions, unless Code D or P applies. See Corrective Distributions on page 4 and IRA Revocation or Account Closure on page 2 for more information. | 1, 2, 4, B, or J |
9—Cost of current life insurance protection. | Use Code 9 to report premiums paid by a trustee or custodian for current life or other insurance protection. See box 2a on page 7 for more information. | None |
A—May be eligible for 10-year tax option. | Use Code A only for participants born before January 2, 1936, or their beneficiaries to indicate the distribution may be eligible for the 10-year tax option method of computing the tax on lump-sum distributions (on Form 4972, Tax on Lump-Sum Distributions). To determine whether the distribution may be eligible for the tax option, you need not consider whether the recipient used this method (or capital gain treatment) in the past. | 4 or 7 |
B—Designated Roth account distribution. | Use Code B for a distribution from a designated Roth account that is not a qualified distribution. But use Code E for a section 415 excess. | 1, 2, 4, 8, D, G, L, or P |
D—Excess contributions plus earnings/excess deferrals taxable in 2006. | See the explanation for Code 8. Generally, do not use Code D for an IRA distribution under section 408(d)(4) or 408(d)(5). | 1, 2, 4, or B |
E—Excess annual additions under section 415/certain excess amounts under section 403(b) plans. | See Excess Annual Additions Under Section 415 on page 5. | None |
F—Charitable gift annuity. | See Charitable gift annuities on page 7. | None |
G—Direct rollover and rollover contribution. |
Use Code G for a direct rollover from a qualified plan (including a governmental section 457(b) plan) or section 403(b) plan
to an eligible
retirement plan (another qualified plan, a section 403(b) plan, or an IRA). See Direct Rollovers on page 3. Also use Code G for certain
distributions from conduit IRAs to an employer plan and IRA rollover contributions to an accepting employer plan. See Conduit IRAs on page
2.
Note: Do not use Code G for a direct rollover from a designated Roth account to a Roth IRA. Use Code H. |
4 or B |
H—Direct rollover of a designated Roth account distribution to a Roth IRA. | Use Code H for a direct rollover of a distribution from a designated Roth account to a Roth IRA. | 4 |
J—Early distribution from a Roth IRA. | Use Code J for a distribution from a Roth IRA when Code Q or Code T does not apply. But use Code 2 for an IRS levy and Code 5 for a prohibited transaction. | 8 or P |
L—Loans treated as deemed distributions under section 72(p). | Do not use Code L to report a loan offset. See Loans Treated as Distributions on page 5. | 1, 4, or B |
N—Recharacterized IRA contribution made for 2008. | Use Code N for a recharacterization of an IRA contribution made for 2008 and recharacterized in 2008 to another type of IRA by a trustee-to-trustee transfer or with the same trustee. | None |
P—Excess contributions plus earnings/excess deferrals taxable in 2007. | See the explanation for Code 8. The IRS suggests that anyone using Code P for the refund of an IRA contribution under section 408(d)(4), including excess Roth IRA contributions, advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the contributions were made. | 1, 2, 4, B, or J |
Q—Qualified distribution from a Roth IRA. |
Use Code Q for a distribution from a Roth IRA if you know that the participant meets the 5-year holding period and:
|
None |
R—Recharacterized IRA contribution made for 2007. | Use Code R for a recharacterization of an IRA contribution made for 2007 and recharacterized in 2008 to another type of IRA by a trustee-to-trustee transfer or with the same trustee. | None |
S—Early distribution from a SIMPLE IRA in the first 2 years, no known exception. | Use Code S only if the distribution is from a SIMPLE IRA in the first 2 years, the employee/taxpayer has not reached age 59½, and none of the exceptions under section 72(t) are known to apply when the distribution is made. The 2-year period begins on the day contributions are first deposited in the individual's SIMPLE IRA. Do not use Code S if Code 3 or 4 applies. | None |
T—Roth IRA distribution, exception applies. |
Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:
|
None |
*See the first Caution for box 7 instructions on page 10. |
File Form 5498, IRA Contribution Information, with the IRS by June 1, 2009, for each person for whom in 2008 you maintained any individual retirement arrangement (IRA), including a deemed IRA under section 408(q).
An IRA includes all investments under one IRA plan. It is not necessary to file a Form 5498 for each investment under one plan. For example, if a participant has three certificates of deposit (CDs) under one IRA plan, only one Form 5498 is required for all contributions and the fair market values (FMVs) of the CDs under the plan. However, if a participant has established more than one IRA plan with the same trustee, a separate Form 5498 must be filed for each plan.
another SIMPLE IRA, (c) a SEP IRA to another SEP IRA or to a traditional IRA, or (d) a Roth IRA to a Roth IRA. For reporting purposes, contributions and rollovers do not include these transfers.
the year.
$2,500 to a SIMPLE IRA plan. For more information on catch-up elective deferral contributions, see Regulations
section 1.414(v)-1. Include any catch-up amounts when reporting contributions for the year in boxes 1, 8, 9, or 10.
box 3.
Note. A qualified charitable distribution is counted for purposes of the RMD requirements under sections 408(a)(6), 408(b)(3), and 408A(c)(5). For each IRA you held as of December 31 of the prior year, if an RMD is required for the year, you must provide a statement to the IRA participant by January 31 regarding the RMD using one of two alternative methods described below. You are not required to use the same method for all IRA participants; you can use Alternative one for some IRA participants and Alternative two for the rest. Under both methods, the statement must inform the participant that you are reporting to the IRS that an RMD is required for the year. The statement can be provided in conjunction with the statement of the FMV.
If the IRA participant is deceased, and the surviving spouse is the sole beneficiary, special rules apply for RMD reporting. If the surviving spouse elects to treat the IRA as the spouse's own, then report with the surviving spouse as the owner. However, if the surviving spouse does not elect to treat the IRA as the spouse's own, then you must continue to treat the surviving spouse as the beneficiary. Until further guidance is issued, no reporting is required for IRAs of deceased participants (except where the surviving spouse elects to treat the IRA as the spouse's own, as described above).
and W-2G.
-
A list of the areas for which relief has recently been granted,
-
News Releases detailing the scope of the relief and any special reporting instructions, and
-
A link to the Federal Emergency Management Agency's list of federal disaster declarations.
for a prior year. The period is the time the participant was in the designated zone or area plus at least 180 days. The participant must designate the IRA contribution for a prior year to claim it as a deduction on the income tax return. Under section 219(f) as amended by the HERO Act, P.L. 109-227, combat zone compensation that is excluded from gross income under section 112 is treated as includible compensation for purposes of determining IRA contributions. If a qualifying combat zone participant makes a contribution to an IRA after April 15 and designates the contribution for a prior year, you must report the type of contribution (box 7) and the amount on Form 5498. Report the amount either for
(1) the year for which the contribution was made or (2) a subsequent year.
-
If you report the contribution for the year it is made, no special reporting is required. Include the contribution in box 1 of an original Form 5498 or of a corrected Form 5498 if an original was previously filed.
-
If you report the contribution on Form 5498 in a subsequent year, you must include the year for which the contribution was made, the amount of the contribution, and one of the following indicators:
-
Use “AF” (Allied Force) for the Kosovo area.
-
Use “JE” (Joint Endeavor) for the Persian Gulf area.
-
Use “EF” (Enduring Freedom) for Afghanistan, Uzbekistan, Kyrgyzstan, Pakistan, Tajikistan, Jordan, and Somalia.
-
Use “IF” (Iraqi Freedom) for the Arabian Peninsula Areas (the Persian Gulf, the Red Sea, the Gulf of Oman, the portion of the Arabian Sea that lies north of 10 degrees north latitude and west of 68 degrees east longitude, the Gulf of Aden, and the total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates and the airspace above such locations).
-
applies to beneficiary accounts under the inherited IRA rules on page 14. For more information about the requirement to furnish statements to participants, see part M in the 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G. If you do not furnish another statement to the participant because no reportable contributions were made for the year, the statement of the FMV of the account must contain a legend designating which information is being furnished to the Internal Revenue Service.
The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 5498.
Additionally, the IRS
encourages you to designate an account number for all Forms 5498 that you file. See part L in the 2008 General Instructions
for Forms 1099, 1098,
5498,
and W-2G.
If the blank box is used to report more than one type of contribution, a separate Form 5498 will be required for each type of contribution.
Enter contributions to a traditional IRA made in 2008 and through April 15, 2009, designated for 2008.
Report gross contributions, including the amount allocable to the cost of life insurance (see box 6) and including any excess contributions, even if the excess contributions were withdrawn. If an excess contribution is treated as a contribution in a subsequent year, do not report it on Form 5498 for the subsequent year. It has already been reported as a contribution on Form 5498 for the year it was actually contributed.
Also include employee contributions to an IRA under a SEP plan. These are contributions made by the employee, not by the employer, that are treated as regular IRA contributions subject to the 100% of compensation and $5,000 ($6,000 for participants 50 or older) limits of section 219. Do not include employer SEP IRA contributions or SARSEP contributions under section 408(k)(6). Instead, include them in box 8.
Also, do not include in box 1 contributions to a SIMPLE IRA (report them in box 9) and a Roth IRA (report them in box 10). In addition, do not include in box 1 rollovers and recharacterizations (report rollovers in box 2 and recharacterizations in box 4), or a Roth IRA conversion amount (report in box 3).
Enter any rollover contributions to any IRA received by you during 2008. Include a direct rollover from a qualified plan (including a governmental section 457(b) plan) or section 403(b) plan. Also include any qualified rollover contribution, as defined in section 408A(e), from an eligible retirement plan (other than an IRA) to a Roth IRA. For the rollover of property, enter the FMV of the property on the date you receive it. This value may be different from the value of the property on the date it was distributed to the participant.
Enter the amount converted or reconverted from a traditional IRA, SEP IRA, or SIMPLE IRA to a Roth IRA during 2008. Do not include a rollover from one Roth IRA to another Roth IRA. Include this type of rollover in box 2.
Enter any amounts recharacterized plus earnings from one type of IRA to another.
For endowment contracts only, enter the amount included in box 1 allocable to the cost of life insurance.
Check the appropriate box.
Enter employer contributions made to a SEP IRA (including salary deferrals under a SARSEP) during 2008 including contributions made in 2008 for 2007, but not including contributions made in 2009 for 2008. Do not enter employee contributions to an IRA under a SEP plan. Report any employee contributions to an IRA under a SEP plan in box 1. Also include in box 8 SEP contributions made by a self-employed person to his or her own account.
Enter any contributions made to a SIMPLE IRA during 2008. Do not include contributions to a SIMPLE 401(k) plan.
Enter any contributions made to a Roth IRA in 2008 and through April 15, 2009, designated for 2008. However, report Roth IRA conversion amounts in box 3.
Check the box if the participant must take a required minimum distribution (RMD) for 2009. You are required to check the box for the year in which the IRA participant reaches age 70½ even though the RMD for that year need not be made until April 1 of the following year. Then check the box for each subsequent year an RMD is required to be made.
On Form 5498, or in a separate statement, report the information required by Alternative one or Alternative two. See page 13. To determine the RMD, see the regulations under sections 401(a)(9) and 408(a)(6) and (b)(3). If you use Form 5498 to report the additional information under Alternative one, enter the amount and date in the blank box to the left of box 10 on the form.
More Online Instructions |