What Is a 1099-R and How Does It Affect Your Taxes?

A 1099-R is the tax form that reports money paid out of a retirement plan, pension, annuity, profit-sharing plan, IRA, or insurance contract during the year. Any payer that sent you $10 or more from one of these accounts must issue a 1099-R to you and file a copy with the IRS.¹ The dollar amounts and the code in Box 7 decide how much of the distribution is taxable, whether you owe a 10% early-withdrawal penalty, and whether a rollover kept the money out of taxable income.

Who Gets One and When It Should Arrive

You get a 1099-R whenever $10 or more moved out of a tax-advantaged account. That covers 401(k)s, 403(b)s, profit-sharing plans, traditional IRAs, Roth IRAs, pensions, annuities, and survivor income benefit plans.¹ It also covers transactions that aren’t taxable at all, like direct rollovers and Roth conversions, because the IRS still wants to see the money move.

Payers must send your copy by January 31 following the year of the distribution, with the deadline pushed to the next business day if January 31 lands on a weekend. If you don’t have your form by the end of February, call the IRS at 800-829-1040. The IRS will contact the payer and send you Form 4852, a substitute you can file with your return if the real form still doesn’t show up.²

The Boxes That Change Your Tax Bill

The form has more than a dozen numbered boxes. Five of them do almost all the work.

Box 1: Gross Distribution

Box 1 is the total that came out of the account for the year, before any tax was withheld. Every dollar that moved is included, direct rollovers and Roth conversions too. A big number here does not mean you owe tax on that whole amount.

Box 2a: Taxable Amount

Box 2a is the portion that’s subject to ordinary income tax. For a fully pre-tax account like a traditional 401(k), Box 2a usually matches Box 1. The two diverge when the distribution includes after-tax money you already paid tax on, or when the funds moved directly into another qualified account.

Sometimes the payer can’t work out the taxable share. In that case Box 2a is blank and the “Taxable amount not determined” box in 2b is checked.³ Then the math is on you. If you made nondeductible contributions to a traditional IRA over the years, you’ll need Form 8606 to figure the taxable portion.⁴

Box 4: Federal Income Tax Withheld

Box 4 is money the payer already sent to the IRS on your behalf. It credits against your total tax liability the same way wage withholding from a W-2 does. If more was withheld than you ultimately owe, you get the difference back.

Box 5: Employee Contributions or Insurance Premiums

Box 5 shows the part of the distribution that represents after-tax employee contributions, designated Roth contributions, or insurance premiums coming back to you tax-free. It’s already baked into Box 2a, so don’t subtract it a second time.⁵

Box 7: Distribution Code

Box 7 carries one or two alphanumeric codes explaining why the money left the account. It’s the most consequential box on the form, because the code drives whether you owe the 10% early-withdrawal penalty, whether the distribution is tax-free, or whether it’s a routine taxable event.

What the Box 7 Code Means

These are the codes most people see:

Code 1 — Early distribution, no known exception. Money came out before you turned 59½ and the payer either doesn’t know an exception applies or isn’t required to determine one. If you actually qualify for an exception, you claim it yourself on Form 5329.⁶
Code 2 — Early distribution, exception applies. The payer knows you qualify for a penalty exception. Ordinary income tax still applies to the taxable portion, but no 10% penalty.⁷
Code 4 — Death. The distribution went to a beneficiary, estate, or trust after the account owner died. No 10% penalty regardless of the deceased owner’s age, though income tax still applies to the taxable portion.⁸
Code 7 — Normal distribution. A standard withdrawal, typically at 59½ or older. Ordinary income tax, no penalty.
Code G — Direct rollover. Money moved directly to another qualified plan or IRA without passing through your hands. Box 2a should be zero.
Code J — Early Roth IRA distribution. You pulled from a Roth IRA before 59½ and the payer doesn’t know whether an exception applies. What you actually owe depends on whether contributions or earnings came out.

Roth distributions deserve a quick note. You can always withdraw your own Roth contributions tax-free and penalty-free at any age. Earnings are a different story: they come out tax-free only in a “qualified distribution,” which requires the five-taxable-year period to have passed since your first Roth contribution or conversion, plus one of the qualifying events (reaching 59½, disability, or a first-time home purchase up to $10,000).⁹ Since contributions come out first, smaller Roth withdrawals often stay entirely tax-free even without meeting those rules.

The 10% Early Withdrawal Penalty

Distributions before age 59½ from a qualified retirement plan or IRA generally get hit with a 10% additional tax on top of ordinary income tax.¹⁰ The penalty runs against the taxable portion, not necessarily the full amount that came out.

The tax code lists exceptions. Among the ones people actually use:

Leaving your job in or after the year you turn 55 (age 50 for qualifying public safety employees) and taking distributions from that employer’s plan.
Substantially equal periodic payments calculated on your life expectancy, taken at least annually. Once started, they must continue for at least five years or until you reach 59½, whichever is later.
Total disability, or distributions to a beneficiary after the account holder’s death.
Unreimbursed medical expenses above the deduction threshold.
Payments to an ex-spouse under a qualified domestic relations order from a qualified plan.

If Box 7 shows Code 1 but you actually qualify for an exception, file Form 5329 with the correct exception code. Skip that step and the IRS will assess the penalty based on the code the payer reported.¹¹

Rollovers and the 20% Withholding Trap

How you move retirement money matters. A direct rollover (Code G) sends funds straight from one custodian to another. The money never touches your account, no tax is withheld, and Box 2a shows zero.¹²

An indirect rollover works differently. If the distribution is paid to you instead of sent directly to another plan, the payer must withhold 20% for federal income tax.¹³ You then have 60 days to deposit the full original distribution amount into another eligible retirement account. But you only received 80% of the money, so to complete the rollover and not be taxed on the withheld portion, you have to make up that 20% out of pocket. You’ll get the withheld amount back when you file, but you need the cash in the meantime. Anything short of the full amount within 60 days is treated as a taxable distribution.¹²

There’s also a one-per-year limit. If you use an indirect (60-day) rollover to move funds between IRAs, you get one such rollover per 12-month period across all your IRAs combined. The IRS treats every traditional, Roth, SEP, and SIMPLE IRA you own as a single IRA for this rule. A second indirect IRA-to-IRA rollover within that window becomes taxable, and if it still lands in an IRA, the IRS treats it as an excess contribution subject to a 6% annual penalty.¹² Direct trustee-to-trustee transfers, Roth conversions, and rollovers between employer plans and IRAs don’t count against the limit.

Required Minimum Distributions Show Up Here Too

Once you reach the required beginning age, mandatory annual withdrawals from traditional IRAs and employer retirement plans come out and get reported on your 1099-R as ordinary income. The age is currently 73, rising to 75 in 2033 under the SECURE 2.0 Act.¹⁴

If Your 1099-R Is Wrong or Missing

Spot a mistake, like the wrong distribution code or an incorrect taxable amount? Contact the plan administrator or financial institution that issued the form. Only the payer can issue a corrected 1099-R, and you can’t just override the figures on your return. The IRS matches every 1099-R against what you report, and a mismatch produces a CP2000 notice proposing changes and potentially additional tax.¹⁶

A corrected form has the “Corrected” box checked at the top and replaces the original in IRS records. If a fix won’t arrive before the filing deadline, file using the original figures and amend later with Form 1040-X once the correction comes. If the payer refuses to fix a real error, Form 4852 lets you substitute your best estimates and explain the discrepancy, though the IRS recommends exhausting attempts to get the corrected form first.¹⁷

If the form never arrives, start with the payer in early February. If it still hasn’t come by the end of February, call the IRS at 800-829-1040 with your name, address, Social Security number, and the payer’s name and address. The IRS will contact the payer and send you Form 4852 with instructions.² File using your best estimates on Form 4852 if the deadline is closing in, and amend later if the real numbers differ.

1
Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
2
Internal Revenue Service. Topic No. 154, Form W-2 and Form 1099-R (What to Do if Incorrect or Not Received)
3
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
4
Internal Revenue Service. Instructions for Form 8606 – Nondeductible IRAs
5
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Box 5
6
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Code 1
7
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Code 2
8
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Code 4
9
eCFR. 26 CFR 1.408A-6 – Distributions
10
Office of the Law Revision Counsel. 26 USC 72 – Section: (t) 10-Percent Additional Tax on Early Distributions
11
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
12
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
13
eCFR. 26 CFR 31.3405(c)-1 – Withholding on Eligible Rollover Distributions
14
Internal Revenue Service. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans – Section: (e) Reduction of Tax in Certain Cases
16
Taxpayer Advocate Service. Notice CP2000
17
Internal Revenue Service. Form 4852 – Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R