Instructions For Forms 1099-R And 5498 - Distributions From Pensions, Annuities, Retirement Or Profit-Sharing Plans, Iras, Insurance Contracts, Etc. And Ira Contribution Information - Irs - 2017 Page 8
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234. The loan amount does not exceed the limits in
The distribution is not subject to the 10% additional tax
section 72(p)(2)(A) (maximum limit is equal to the lesser
under section 72(t), indicated by reporting Code 2 in
of 50% of the vested account balance or $50,000).
box 7; and
The distribution must be elected by the employee no
Certain exceptions, cure periods, and suspension of
later than 90 days after the first default elective
the repayment schedule may apply.
contribution under the EACA, as specified in Regulations
section 1.414(w)-1(c)(2).
The loan agreement must specify the amount of the
loan, the term of the loan, and the repayment schedule.
If the distribution is from a designated Roth account,
The agreement may include more than one document.
enter Code B as well as Code 2 in box 7.
If a loan fails to satisfy (1), (2), or (3), the balance of the
Corrected Form 1099-R
loan is a deemed distribution. The distribution may occur
If you filed a Form 1099-R with the IRS and later discover
at the time the loan is made or later if the loan is not repaid
that there is an error on it, you must correct it as soon as
in accordance with the repayment schedule.
possible. For example, if you transmit a direct rollover and
file a Form 1099-R with the IRS reporting that none of the
If a loan fails to satisfy (4) at the time the loan is made,
direct rollover is taxable by entering 0 (zero) in box 2a,
the amount that exceeds the amount permitted to be
and you then discover that part of the direct rollover
loaned is a deemed distribution.
consists of RMDs under section 401(a)(9), you must file a
Deemed distribution. If a loan is treated as a deemed
corrected Form 1099-R reporting the eligible rollover
distribution, it is reportable on Form 1099-R using the
distribution as the direct rollover and file a new Form
normal taxation rules of section 72, including tax basis
1099-R reporting the RMD as if it had been distributed to
rules. The distribution also may be subject to the 10%
the participant. See part H in the 2017 General
early distribution tax under section 72(t). It is not eligible to
Instructions for Certain Information Returns, or Pub. 1220,
be rolled over to an eligible retirement plan nor is it eligible
if filing electronically.
for the 10-year tax option. On Form 1099-R, complete the
Filer
appropriate boxes, including boxes 1 and 2a, and enter
Code L in box 7. Also, enter Code 1 or Code B, if
The payer, trustee, or plan administrator must file Form
applicable.
1099-R using the same name and employer identification
number (EIN) used to deposit any tax withheld and to file
Interest that accrues after the deemed distribution of a
Form 945, Annual Return of Withheld Federal
loan is not an additional loan, and, therefore, is not
Income Tax.
reportable on Form 1099-R.
Loans that are treated as deemed distributions or that
Beneficiaries
are actual distributions are subject to federal income tax
If you make a distribution to a beneficiary, trust, or estate,
withholding. If such a distribution occurs after the loan is
prepare Form 1099-R using the name and TIN of the
made, you must withhold only if you distributed cash or
beneficiary, trust, or estate, not that of the decedent. If
property (other than employer securities) at the time of the
there are multiple beneficiaries, report on each Form
deemed or actual distribution. See section 72(p), section
1099-R only the amount paid to the beneficiary whose
72(e)(4)(A), and Regulations section 1.72(p)-1.
name appears on the Form 1099-R, and enter the
Subsequent repayments. If a participant makes any
percentage in box 9a, if applicable.
cash repayments on a loan that was reported on Form
Disclaimers. A beneficiary may make a qualified
1099-R as a deemed distribution, the repayments
disclaimer of all or some of an IRA account balance if the
increase the participant's tax basis in the plan as if the
disclaimed amount and income are paid to a new
repayments were after-tax contributions. However, such
beneficiary or segregated in a separate account. A
repayments are not treated as after-tax contributions for
qualified disclaimer may be made after the beneficiary has
purposes of section 401(m) or 415(c)(2)(B).
previously received the RMD for the year of the
For a deemed distribution that was reported on Form
decedent's death. For more information, see Rev. Rul.
1099-R but was not repaid, the deemed distribution does
2005-36, 2005-26 I.R.B. 1368, available at
not increase the participant's basis.
irb/2005-26_IRB/ar11.html.
If a participant's accrued benefit is reduced (offset) to
Alternate Payee Under a Qualified Domestic
repay a loan, the amount of the account balance that is
offset against the loan is an actual distribution. Report it as
Relations Order (QDRO)
you would any other actual distribution. Do not enter Code
Distributions to an alternate payee who is a spouse or
L in box 7.
former spouse of the employee under a QDRO are
reportable on Form 1099-R using the name and TIN of the
Permissible Withdrawals Under Section 414(w)
alternate payee. If the alternate payee under a QDRO is a
For permissible withdrawals from an eligible automatic
nonspouse, enter the name and TIN of the employee.
contribution arrangement (EACA) under section 414(w):
However, this rule does not apply to IRAs; see Transfer of
The distribution (except to the extent the distribution
an IRA to spouse, earlier.
consists of designated Roth contributions) is included in
the employee's gross income in the year distributed;
Nonresident Aliens
Report principal and earnings in boxes 1 and 2a except,
If income tax is withheld under section 3405 on any
in the case of a distribution from a designated Roth
distribution to a nonresident alien, report the distribution
account, report only earnings in box 2a;
-8-
Instructions for Forms 1099-R and 5498 (2017)
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