In my last post I talked about the various 1099 forms you might receive for your investment accounts. Today I want to briefly expand on one in particular — the 1099-R.

For those who aren’t retired, you might be wondering why did I receive a retirement account distribution 1099. After all, you didn’t take money out of your retirement account… right?

Well, in some cases, you did — at least technically.

If you rolled over an old 401(k) into an IRA during the year, that transaction is considered a distribution from the original account. Even though the money stayed within the retirement system, the IRS still requires that movement to be reported.

Ideally, that rollover was done as a direct rollover. That means the funds were sent directly from the old custodian to the new one, rather than being paid to you personally. That’s why rollover checks are typically made payable to the new custodian for the benefit of you, AKA FBO.

So, while the transaction shows up as a distribution on the 1099-R, it’s usually reported on your tax return as a non-taxable rollover. Assuming it was handled properly.

The key takeaway is simple: if you receive a 1099-R, make sure your accountant has it so they can report the transaction correctly.

If you have questions about any tax forms related to your investments, reach out to me here.