What is the purpose of a 1099-R?
A 1099-R is an IRS tax form that reports distributions from annuities, IRAs, retirement plans, profit-sharing plans, pensions, and insurance contracts. The gross amount of the distribution, taxable amount, employee contributions, tax withholding, and the distribution code are reported to the contract owner and the IRS.
When is the 1099-R available?
Pacific Life is required to send the 1099-R either electronically if the contract owner is enrolled in e-delivery or by U.S. Mail by January 31 of the year following the year in which the distribution(s) took place. The 1099-R is also available through the Pacific Life website as early as February 1. See "How can I access my 1099-R online?" below for assistance with accessing your 1099-R on the website.
Who receives a 1099-R?
How is a 1099-R accessed online?
After logging on to Pacific Life's My Account website (username and password are required), follow these instructions:
Active & Annuitized Contracts
For contracts in active or annuitized status, access the My Contract section by clicking the link in the top middle, then:
Note: 1099-R information is not accessible for inactive (e.g., fully surrendered, free-looked, etc.) contracts via the My Account website.
Q: Why didn’t I receive a 1099-R?
A: There could be several reasons for this, but the most common is that you may not have taken any reportable distributions from your Pacific Life contract during the tax year. Thus, nothing needs to be reported to the IRS. Also, if applicable, clients enrolled in electronic delivery can access their 1099-R through their profile on the Pacific Life website at www.PacificLife.com as early as February 1. See "How can I access my 1099-R online?" above for assistance with accessing your 1099-R on the website.
Other reasons for not receiving a 1099-R can include a delay in USPS shipping or outdated mailing information – please call Customer Service at (800) 722-4448 if you have recently changed your mailing address. 1099-Rs are mailed out from Pacific Life to qualifying owners by January 31.
Q: What amount is reported as taxable?
A: For qualified contracts, such as IRAs, distributions are 100% taxable. For nonqualified contracts, any earnings above the cost basis are taxable. For more information about cost basis, click here.
Q: Can a 1099-R be received even if no money was withdrawn during the tax year?
A: Yes, a 1099-R can still be received. Listed below are some common reasons:
Q: Why did I receive a 1099-R if a 1035(a) tax-free exchange was placed?
A: A 1035(a) tax-free exchange may be tax free, but the IRS still requires this exchange to be reported. However, the 1099-R will show the taxable amount as $0 and distribution code of "6" (1035 exchange).
Q: I rolled over my funds to a different plan type at another carrier (i.e., 401(k) to IRA, TSA to IRA). Why did I receive a 1099-R?
A: The rollover is reportable and may be taxable and will be coded with a Distribution Code "G" on Tax Form 1099-R. Typically, the accepting carrier will generate a Tax Form 5498, confirming the rollover and offsetting the taxable distribution. A tax advisor should be consulted for additional information.
Q: Why would more than two 1099-Rs be received by the same person?
A: Listed below are some common reasons:
Q: How is it possible that two 1099-Rs are received for the same Roth IRA contract?
A: Contracts that were converted to a Roth, converted back to a traditional IRA, and then back to a Roth IRA will receive two 1099-Rs. Roth conversions are fully taxable to the contract owner.
Q: How many IRA rollovers can I perform in a 12-month period?
A: Current tax law only permits one rollover distribution for all IRAs within a 12-month period. For purposes of this one-rollover-per-year limitation, all of your IRAs (including Roth, SIMPLE, and SEP IRAs) are aggregated, so a rollover involving any one of them precludes a rollover involving any other account (except qualified plans) within the next year. If you have additional questions about this one-rollover-per-year limitation, please contact your tax advisor.
Q: If I am enrolled in a scheduled withdrawal program and turned 59½ last year, will two 1099-Rs be received?
A: Yes, you will receive two 1099-Rs: One 1099-R with distribution code "1" (early distribution, no known exception) and another 1099-R with distribution code "7" (normal distribution).
Q: Why is a 1099-R received if 72(t)/72(q) distributions are being taken?
A: 72(t)/72(q) distributions are still taxable; by requesting a 72(t)/72(q) distribution, you are only avoiding the 10% premature distribution penalty from the IRS. The 1099-R should show distribution code "2" (early distribution, exception applies).
Q: If a contract was fully surrendered in the tax year and the value was less than the cost basis, can the loss be written off on a person's taxes?
A: A tax advisor should be consulted for additional information.
Q: Will a 1099-R be issued to a person who passed away during the tax year?
Yes, if a withdrawal was taken prior to the date of death, a 1099-R will be issued under the deceased owner's taxpayer identification number.
Q: What if a 1099-R has not been received or has been misplaced?
A: The most current 1099-R, as well as those of previous tax years, will be displayed on the My Account website.
Q: Why is my online 1099-R blank?
A: If you accessed your 1099-R on the website and you see a form with blank fields, this may be due to your software blocking some of the information for security reasons. In this case, there will often be a status bar at the top of the window asking if you would like to "trust" this document. Doing so usually reveals the missing content.
Q: What is distribution code D?
A: Changes in the tax code (section 1411) include a new "Net Investment Income Tax" for distributions from nonqualified contracts. Though the IRS requires that the new distribution code appear in box 7 on all 1099-Rs for taxable distributions from nonqualified annuity contracts, the Net Investment Income Tax is based on income levels and may or may not apply to you. Please consult your tax advisor for more information.
What is cost basis?
Cost basis is the original investment amount of after-tax dollars used to fund or invest in a contract. The IRS requires gains to be calculated. The dollar amount exceeding the cost basis is reported as taxable earnings on the contract when distributed.
What is the difference between a reportable and taxable distribution?
Types of Transfers
For specific information regarding distribution codes on a 1099-R, download http://www.irs.gov/pub/irs-pdf/f1099r.pdf.