IRS Form 1099-R Questions and Answers


General Information

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?

  • Contract owners with reportable distributions from their annuities during the previous calendar year will receive a 1099-R. For more information, see "What is the difference between a reportable and taxable distribution?" below.
  • If applicable, a 1099-R is mailed to the contract owner's address of record. For clients enrolled in electronic delivery, notification of 1099-R availability on the website is sent to the email address on record.
  • The information on the 1099-R is based on the contract owner, not the annuitant (except for 457(b) government entity-owned contracts).
  • If the contract has joint owners, the 1099-R is issued to the primary owner.
  • A 1099-R is not generated on corporate-owned nonqualified, 401(k), Pension, Keogh, 457(b), or 501(c)(3) not-for-profit entity-owned contracts.
  • A 1099-R is also not generally generated if your contract is held by a custodian company. In this case, please contact your custodian for your 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:

  • For clients with more than one contract, click the appropriate contract number on the contract list. For clients with one contract, proceed to the next step.
  • Click on the Contract Information drop-down menu and select Document Center.
  • Select the Tax Documents section, then the document type corresponding to the desired tax year.
  • When the 1099-R opens, click the Printer icon to print either the entire PDF file or specific pages.

Note: 1099-R information is not accessible for inactive (e.g., fully surrendered, free-looked, etc.) contracts via the My Account website.


Frequently Asked Questions

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:

  • A fee redemption may have occurred on a nonqualified contract, which is reported as a normal distribution.
  • A collateral assignment may have been completed.
  • An ownership change may have occurred.
  • A Roth conversion may have occurred.

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:

  • The person resided in multiple or different states when checks were sent.
  • A person reached age 59½.
  • The cancellation or start of a 72(t)/72(q) program may have occurred.
    There may be different distribution codes. For specific information regarding distribution codes on a 1099-R, download http://www.irs.gov/pub/irs-pdf/f1099r.pdf.

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.


Additional 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.

An example:

  • Amount of check to fund new account: $15,000.
  • Post-TEFRA cost basis: $15,000.
  • Surrender Value: $25,000
  • Taxable gain: $10,000.
  • Distributions that are taken will be taxable as earnings for the portion above the cost basis (in this example: $10,000).

What is the difference between a reportable and taxable distribution?

  • The IRS requires certain transactions to be reported, although the transaction may not be taxable. These types of transactions may include, but are not limited to, a 1035(a) tax-free exchange or a direct rollover.
  • The IRS has designated certain transactions as both reportable and taxable; there are tax consequences. These may include, but are not limited to, a distribution (full or partial), beneficiary payout, or a Roth IRA conversion.
  • A transaction can be reportable and not taxable; likewise, a transaction that is taxable may not be reportable by Pacific Life.
  • The IRS has designated certain transactions as neither reportable nor taxable. This may include, but is not limited to, a direct transfer.

Types of Transfers

  • 1035(a) tax-free exchange: Allows for a tax-free exchange of a nonqualified annuity or life insurance contract into a new or pre-existing nonqualified annuity. The contract registration must be like-for-like and the transfer must be a trustee-to-trustee exchange.
  • Direct transfer: A transfer of a qualified plan type to the same qualified plan type (i.e., IRA to IRA, TSA to TSA).
  • Direct rollover: A transfer of a qualified plan type to a different qualified plan type (i.e., 401(k) to IRA, TSA to IRA).

Distribution Codes
For specific information regarding distribution codes on a 1099-R, download http://www.irs.gov/pub/irs-pdf/f1099r.pdf.