Empower Tax Notice: 1099-R, 5498, and Brokerage Forms

Empower sends a handful of IRS tax forms depending on what happened in your account during the year. If you have a 401(k), 403(b), IRA, or similar retirement account, the two Empower tax forms you’re most likely to receive are Form 1099-R (money that came out) and Form 5498 (money that went into an IRA, plus the year-end value). If you also hold a taxable brokerage account, add Forms 1099-INT, 1099-DIV, and 1099-B to the list. Each one has a specific job on your return.

Form 1099-R: Distributions From Your Retirement Account

Empower files a 1099-R any time $10 or more leaves a retirement account during the calendar year.1Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. That covers withdrawals, rollovers, required minimum distributions, Roth conversions, and a 401(k) loan that you failed to repay, which the IRS treats as a distribution. If more than one type of distribution happened in the same account during the year, you may get more than one 1099-R.

Four boxes carry most of the weight:

  • Box 1 (Gross Distribution) is the total paid out before any taxes were withheld.
  • Box 2a (Taxable Amount) is the portion included in your gross income. For a direct rollover, this is often zero.
  • Box 4 (Federal Income Tax Withheld) is money Empower sent to the IRS on your behalf. It counts as a credit against your total tax when you file.
  • Box 7 (Distribution Code) is a one- or two-character code that tells the IRS why the money came out.

What the Box 7 Code Means

The code in Box 7 drives the tax treatment of the whole distribution. The ones you’ll see most often:2Internal Revenue Service. Instructions for Forms 1099-R and 5498

  • Code 1 — Early distribution, no known exception. You were under 59½ and the plan didn’t identify a penalty exception. Ordinary income tax applies, plus the 10% early withdrawal penalty unless you claim an exception yourself on Form 5329.3Internal Revenue Service. Instructions for Form 5329 – Additional Taxes on Qualified Plans Including IRAs and Other Tax-Favored Accounts
  • Code 2 — Early distribution, exception applies. Under 59½, but the plan identified a reason the penalty doesn’t apply. This also covers Roth conversions when you’re under 59½.
  • Code 3 — Disability. The distribution went to someone meeting the IRS definition of permanently and totally disabled.
  • Code 4 — Death. Payment went to a beneficiary, estate, or trust. No early withdrawal penalty, regardless of the beneficiary’s age.
  • Code 7 — Normal distribution. You were 59½ or older. Taxable as ordinary income, no penalty. Also used for Roth conversions after 59½.
  • Code G — Direct rollover. Funds moved directly to another qualified plan or IRA. Generally not taxable.

The code isn’t the last word. If you qualified for a penalty exception but the form shows Code 1, you can still claim the exception by filing Form 5329 with your return.4Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions

Withholding and the 60-Day Rollover Trap

Mandatory withholding catches people off guard. If you take money out of a 401(k) or other employer plan and have it paid to you rather than rolling it directly into another account, the plan must withhold 20% for federal taxes.5Office of the Law Revision Counsel. 26 USC 3405 – Special Rules for Pensions, Annuities, and Certain Other Deferred Income You can’t opt out on an eligible rollover distribution paid to you. The only way to avoid it is a direct rollover.

IRA distributions work differently. The default federal rate is 10%, but you can pick a different rate or opt out entirely. Opting out doesn’t erase the tax; it just moves the whole bill to April, and a large distribution with no withholding can trigger an underpayment penalty.

State withholding depends on where you live. Some states require it on retirement distributions, some follow your election, and states without an income tax require none. Box 14 shows any state tax withheld and Box 15 identifies the state.

Now the trap. You have 60 days from the date you receive a distribution to deposit it into another eligible retirement account.6Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions Miss it and the whole amount becomes taxable, plus the 10% penalty if you’re under 59½. The 20% withholding compounds this. Cash out $50,000 from a 401(k) intending to roll it to an IRA, and the plan withholds $10,000 and sends you $40,000. To complete a full rollover you need to deposit the full $50,000 within 60 days, meaning $10,000 out of pocket to cover the withheld amount. Deposit only the $40,000 you received and the missing $10,000 becomes a taxable distribution. You’ll get the withheld amount back as a credit when you file, but the tax on the shortfall stays. A direct rollover sidesteps this because the money never touches your bank account.

Form 5498: IRA Contributions and Year-End Value

If you hold a Traditional, Roth, SEP, or SIMPLE IRA through Empower, you’ll get Form 5498 each year.7Internal Revenue Service. About Form 5498 – IRA Contribution Information You don’t attach it to your return, but the figures on it should line up with what you claimed.

The boxes that matter:

  • Box 1 (IRA Contributions) shows Traditional IRA contributions for the tax year, up to the annual limit of $7,000 in 2026, or $8,000 if you’re 50 or older. Whether the contribution is deductible depends on your income and whether you’re covered by an employer plan.8Internal Revenue Service. Retirement Topics – IRA Contribution Limits
  • Box 2 (Rollover Contributions) confirms that a distribution reported on a 1099-R was successfully rolled over.9Internal Revenue Service. Form 5498 – IRA Contribution Information
  • Box 3 (Roth Conversion Amount) is the total converted from Traditional to Roth during the year. Generally taxable, and should match the corresponding 1099-R.
  • Box 5 (Fair Market Value) is the account’s value as of December 31. The IRS uses it to calculate the following year’s RMD.
  • Box 10 (Roth IRA Contributions) is your Roth contributions for the year. Track this figure; it establishes basis for future tax-free withdrawals.

RMD Information

Box 11 is a checkbox indicating whether an RMD is due for the coming year. Box 12b shows the calculated amount and Box 12a the deadline. Empower may provide the calculation in a separate statement rather than in those boxes. If Box 11 is checked and you skip the distribution, you face a steep excise tax on the amount not withdrawn.

Reconciling With Your 1099-R

A rollover shows up on two forms: a 1099-R from the sending account (often Code G) and a 5498 from the receiving IRA (Box 2). The amounts should match. If they don’t, because part went elsewhere or you kept some, the mismatch will need explaining on your return. Late rollovers completed after 60 days under an IRS waiver appear in Box 13a instead of Box 2.9Internal Revenue Service. Form 5498 – IRA Contribution Information

Qualified Charitable Distributions

If you’re 70½ or older and direct IRA money straight to a qualifying charity, that transfer is a qualified charitable distribution and can be excluded from taxable income up to $108,000 per year, adjusted annually for inflation.10Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements The 1099-R won’t flag it. It will show the full amount in Box 1, typically with Code 7, looking identical to any other distribution.

You identify the QCD when filing. On Form 1040, report the full distribution on line 4a, then enter only the taxable portion on line 4b and write “QCD” next to that line.11Internal Revenue Service. Seniors Can Reduce Their Tax Burden by Donating to Charity Through Their IRA If the whole distribution was a QCD, line 4b is zero. Don’t also claim the donation as an itemized deduction; that’s double-counting. Keep the charity’s written acknowledgment.

Forms for Taxable Brokerage Accounts

These forms come only if you also hold a taxable investment account through Empower, not from your retirement plan alone:

On the 1099-B, cost basis for “covered” securities is reported to both you and the IRS. For “noncovered” securities purchased before the covered-security dates, cost basis goes only to you, and you’re responsible for figuring and reporting it. A blank or “noncovered” cost basis is not a green light to leave the sale off your return. The IRS will see the proceeds and, absent a basis figure from you, treat the entire amount as gain.

When Forms Arrive and Where to Find Them

Forms 1099-R, 1099-INT, 1099-DIV, and 1099-B must be mailed or posted electronically by January 31.1Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Form 5498 has a later deadline of May 31, because IRA contributions for the prior tax year can be made all the way to the April filing deadline and totals aren’t final until then.

Log in to your Empower account and open the “Statements and Documents” section, then filter by “Tax Statements” to find your 1099-R, 5498, and any brokerage forms. Electronic copies are usually available before the paper versions arrive.

Missing or Corrected Forms

If January 31 passes without an expected 1099-R, check that Empower has your current mailing address and confirm whether electronic delivery is on. If the form is genuinely missing, contact customer service for a duplicate.

Need to file before it arrives? The IRS lets you use Form 4852 as a substitute, filling in your best estimate of the distribution and withholding from your own records.15Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect If the real form arrives later with different numbers, amend using Form 1040-X.

Corrected forms follow the same logic. If Empower finds an error, they’ll issue a version marked “CORRECTED.” Compare it to the original, and if you’ve already filed, submit a 1040-X. Ignoring a corrected form reliably triggers an IRS notice, because the IRS matches the corrected data to your return automatically.

Where Each Form Lands on Your Return

IRA distributions from a 1099-R go on Form 1040, line 4a (gross) and line 4b (taxable). Distributions from employer plans like 401(k)s and 403(b)s go on lines 5a and 5b. The IRS tracks these separately, so putting amounts on the wrong line can trigger a mismatch notice.

Federal tax withheld in Box 4 of any 1099-R adds to your other withholdings on Form 1040, line 25b, and reduces tax owed or increases your refund.

If Box 7 shows Code 1 and you owe the 10% penalty on the full amount, report it on Schedule 2, line 8 without filing Form 5329.3Internal Revenue Service. Instructions for Form 5329 – Additional Taxes on Qualified Plans Including IRAs and Other Tax-Favored Accounts If you qualify for an exception (such as certain medical expenses or separation from service after age 55), file Form 5329 to claim it.4Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions

Form 5498 doesn’t get attached, but it’s your backup. A Traditional IRA deduction claimed on Schedule 1 should match Box 1. A Roth conversion should reconcile with the corresponding 1099-R and Box 3. The Box 5 fair market value is what you’ll use next year to calculate an RMD if one is required. Keep every 5498 until the account is fully withdrawn, especially for Roth IRAs, where basis tracked over decades determines whether future withdrawals come out tax-free.