Your Questions Answered: Why Did I Receive A 1099R?

“Paul, I thought you said that I didn’t have to pay taxes on my IRA transfer…why did I get a 1099R?”

We got his question a couple of weeks ago from a concerned client a few weeks ago like we do, on average, about twice per year. We get it. A client is told that their IRA transfer or retirement plan rollover isn’t going to have any tax consequences, and then they get this tax reporting form!

A 1099R isn’t something to be afraid of and doesn’t mean an error has been made. A 1099R is generated by a custodian when funds are distributed from a retirement plan, whether it is a taxable distribution or not. Now, how to report this on your tax form is beyond the scope of this blog post, but when clients call or email us concerned, we direct them to Box 2a of the 1099R. Box 2a shows the taxable portion of the distribution and when client’s see a zero, they usually say, “oh.”

Finally, be sure to have this form on hand when you prepare your taxes or give them to your tax preparer with your other tax documents. And, as always, if your have questions about how a distribution might impact your tax situation, we encourage you to speak to a tax professional.

Securities and advisory services offered through LPL Financial, a registered investment adviser.  Member FINRA / SIPC.

This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.