Instructions For Forms 1099-R And 5498 - 2015 (Page 8 of 23) in pdf

2. The agreement specifies that the loan must be

The distribution (except to the extent the distribution

repaid within 5 years, except for a principal residence,

consists of designated Roth contributions) is included in

the employee's gross income in the year distributed;

3. The loan must be repaid in substantially level

Report principal and earnings in boxes 1 and 2a

installments (at least quarterly), and

except, in the case of a distribution from a designated

4. The loan amount does not exceed the limits in

Roth account, report only earnings in box 2a;

section 72(p)(2)(A) (maximum limit is equal to the lesser

The distribution is not subject to the 10% additional tax

of 50% of the vested account balance or $50,000).

under section 72(t), indicated by reporting Code 2 in

Certain exceptions, cure periods, and suspension of

box 7; and

the repayment schedule may apply.

The distribution must be elected by the employee no

later than 90 days after the first default elective

The loan agreement must specify the amount of the

contribution under the EACA, as specified in Regulations

loan, the term of the loan, and the repayment schedule.

section 1.414(w)-1(c)(2).

The agreement may include more than one document.

If the distribution is from a designated Roth account,

If a loan fails to satisfy 1, 2, or 3, the balance of the loan

enter Code B as well as Code 2 in box 7.

is a deemed distribution. The distribution may occur at the

time the loan is made or later if the loan is not repaid in

Corrected Form 1099-R

accordance with the repayment schedule.

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

If a loan fails to satisfy 4 at the time the loan is made,

possible. For example, if you transmit a direct rollover and

the amount that exceeds the amount permitted to be

file a Form 1099-R with the IRS reporting that none of the

loaned is a deemed distribution.

direct rollover is taxable by entering 0 (zero) in box 2a,

Deemed distribution. If a loan is treated as a deemed

and you then discover that part of the direct rollover

distribution, it is reportable on Form 1099-R using the

consists of RMDs under section 401(a)(9), you must file a

normal taxation rules of section 72, including tax basis

corrected Form 1099-R reporting the eligible rollover

rules. The distribution also may be subject to the 10%

distribution as the direct rollover and file a new Form

early distribution tax under section 72(t). It is not eligible to

1099-R reporting the RMD as if it had been distributed to

be rolled over to an eligible retirement plan nor is it eligible

the participant. See part H in the 2015 General

for the 10-year tax option. On Form 1099-R, complete the

Instructions for Certain Information Returns or Pub. 1220,

appropriate boxes, including boxes 1 and 2a, and enter

if filing electronically.

Code L in box 7. Also, enter Code 1 or Code B, if

Filer

applicable.

The payer, trustee, or plan administrator must file Form

Interest that accrues after the deemed distribution of a

1099-R using the same name and employer identification

loan is not an additional loan, and, therefore, is not

number (EIN) used to deposit any tax withheld and to file

reportable on Form 1099-R.

Form 945, Annual Return of Withheld Federal

Loans that are treated as deemed distributions or that

Income Tax.

are actual distributions are subject to federal income tax

withholding. If such a distribution occurs after the loan is

Beneficiaries

made, you must withhold only if you distributed cash or

If you make a distribution to a beneficiary, trust, or estate,

property (other than employer securities) at the time of the

prepare Form 1099-R using the name and TIN of the

deemed or actual distribution. See section 72(p), section

beneficiary, trust, or estate, not that of the decedent. If

72(e)(4)(A), and Regulations section 1.72(p)-1.

there are multiple beneficiaries, report on each Form

Subsequent repayments. If a participant makes any

1099-R only the amount paid to the beneficiary whose

cash repayments on a loan that was reported on Form

name appears on the Form 1099-R, and enter the

1099-R as a deemed distribution, the repayments

percentage in box 9a, if applicable.

increase the participant's tax basis in the plan as if the

Disclaimers. A beneficiary may make a qualified

repayments were after-tax contributions. However, such

disclaimer of all or some of an IRA account balance if the

repayments are not treated as after-tax contributions for

disclaimed amount and income are paid to a new

purposes of section 401(m) or 415(c)(2)(B).

beneficiary or segregated in a separate account. A

For a deemed distribution that was reported on Form

qualified disclaimer may be made after the beneficiary has

1099-R but was not repaid, the deemed distribution does

previously received the RMD for the year of the

not increase the participant's basis.

decedent's death. For more information, see Rev. Rul.

If a participant's accrued benefit is reduced (offset) to

2005-36, 2005-26 I.R.B. 1368, available at

repay a loan, the amount of the account balance that is

irb/2005-26_IRB/ar11.html.

offset against the loan is an actual distribution. Report it as

Alternate Payee under a Qualified Domestic

you would any other actual distribution. Do not enter Code

L in box 7.

Relations Order (QDRO)

Distributions to an alternate payee who is a spouse or

Permissible Withdrawals Under Section 414(w)

former spouse of the employee under a QDRO are

For permissible withdrawals from an eligible automatic

reportable on Form 1099-R using the name and TIN of the

contribution arrangement (EACA) under section 414(w):

alternate payee. If the alternate payee under a QDRO is a

-8-

Instructions for Forms 1099-R and 5498 (2015)

Instructions For Forms 1099-R And 5498 - 2015 Page 8

Related Articles

Related forms

Related Categories