Entering Form 1099-R in ProSeries

The distribution codes are found in box 7 of Form 1099-R and in an unnumbered box on Forms CSA-1099-R and CSF-1099-R. Form RRB-1099-R does not show a distribution code on the form, but the proper distribution code must be entered on the worksheet for proper treatment of the distribution on the tax return.

The distribution codes describe the type of distribution. The program relies on these codes to make the correct calculations. There may be only one code or a combination of two codes, as appropriate.

The Distribution Code(s) are indicated on the 1099-R and indicate under what circumstances the distribution was made.

• 1 - Early distribution, no known exception (in most cases, under age 59 1/2).
• 2 - Early distribution, exception applies (under age 59 1/2).
• 3 - Disability.
• 4 - Death.
• 5 - Prohibited transaction.
• 6 - Section 1035 exchange (a tax-free exchange of life insurance, annuity, qualified long-term care insurance, or endowment contracts).
• 7 - Normal distribution.
• 8 - Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2023.
• 9 - Cost of current life insurance protection.
• A - May be eligible for 10-year tax option (see Form 4972).
• B - Designated Roth account distribution.
• C - Reportable death benefits under section 6050Y
• D - Annuity payments from nonqualified annuities that may be subject to tax under section 1411.
• E - Distributions under Employee Plans Compliance Resolution System (EPCRS).
• F - Charitable gift annuity.
• G - Direct rollover and direct payment
• H - Direct rollover of a designated Roth account distribution to a Roth IRA.
• J - Early distribution from a Roth IRA, no known exception (in most cases, under age 59 1/2).
• K - Distribution of IRA assets not having a readily available FMV.
• L - Loans treated as distributions under section 72(p).
• N - Recharacterized IRA contribution made for 2023
• P - Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2022.
• Q - Qualified distribution from a Roth IRA.
• R - Recharacterized IRA contribution made for 2022.
• S - Early distribution from a SIMPLE IRA in first 2 years, no known exception (under age 59 1/2).
• T - Roth IRA distribution, exception applies.
• U - Dividend distribution from ESOP under sec. 404(k).
• W - Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements.

Code P advises payees that the earnings are taxable in the year in which the contributions were made. If the Form 1099-R has a distribution code P or code R, the distribution is reported on the tax return for the year immediately preceding the year shown on the Form. Sometimes taxpayers will receive notice from their employers letting them know the transaction and amount in time for it to be reported in the original return, but otherwise, it will have to be amended later.

If the Form 1099-R  is a year 2023 form, you enter this in 2022.

1. Open the 2022 return.
2. Open the 1099-R Worksheet.
3. Enter the information from the 1099-R received.
4. Scroll down to page 2 Additional Distribution Information. 
5. Check box A5 Code P or R on a 2023 Form 1099-R.
6. Any Taxable Amount will now show on the as Wages, salaries, tips, etc.
   
   A 2023 Form 1099-R with code "R" does not need to be reported on the tax return, but the amount from box 1 should be included in the explanation statement for the recharacterization.

When you have a taxable distribution from an non-IRA account that has code 8 it is listed on the 1040 line 1 instead of line 4 per the 1040 instructions.

If code 8 is used on a 1099-R for an IRA this shows on the 1040 as a normal distribution.

ProSeries will not carry the taxable amount to Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

See IRS Publication 590-B and Form 1099-R Instructions.

If you have a traditional IRA rollover distribution:

1. Open the 1099-R Worksheet.
2. Fill out page 1 with the information from the 1099-R received.
3. Scroll down to page 2 of the 1099-R worksheet to the Rollovers, Roth Conversions, Roth Rollovers, and Recharacterizations section.
4. Determine if this is a full or partial rollover:
   • If the entire distribution was rolled over check box B1.
   • If this was a partial rollover enter the amount of the partial rollover in B2.
5. If box 7 contains distribution code B or H and the rollover was to a Roth IRA check box B3.

If you have a Roth IRA rollover distribution:

1. Open the 1099-R Worksheet.
2. Fill out page 1 with the information from the 1099-R received.
3. Scroll down to page 2 of the 1099-R worksheet to the Rollovers, Roth Conversions, Roth Rollovers, and Recharacterizations section.
4. Line B4 will show the amount of this distribution that may be rolled or converted to a Roth IRA.
   • If the entire amount on line B4 was a rollover check box B5.
   • If this was a partial rollover enter the amount of the rollover on B6.
5. If the distribution code is G and this was an in-plan Roth rollover to a designated Roth check box B7. 

After completing Form 1099-R Worksheet through box 15-1 as needed you can check the " Entire distribution rolled over" box if the entire amount of the distribution was rolled over (full rollover).  If only part of the distribution was rolled over enter on the " Partial rollover" line the amount that was rolled over.

If any of the distribution was not subject to additional tax:

1. Open the 1099-R Worksheet.
2. Fill out page 1 with the information from the 1099-R received.
3. Open the Form 5329-T if the 1099-R is for the taxpayer or the 5329-S if the 1099-R is for the spouse.
4. Scroll to the Distributions Not Subject to Additional Tax Smart Worksheet below line 1.
5. On lines A-L enter the amount not subject to additional tax.  

To enter a Qualified Charitible Distribution and trigger QCD to print on the 1040:

1. Open the 1099-R Worksheet.
2. Fill out page 1 with the information from the 1099-R received.
3. Enter the amount on Qualified Charitable Distribution Enter IRA distributions made directly by the trustee to a qualified charitable organization.

A qualified charitable distribution (QCD) is a distribution made directly by the trustee of IRA (other than SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions (with certain exceptions).  The taxpayer must have been at least age 70 1/2 when the distribution was made.  The total QCDs for the year cannot be more than $100,000.  (On a joint return, the spouse can also have a QCD for up to $100,000.)  The amount of the QCD is limited to the amount that would otherwise be included in income.  If the IRA includes deductible contributions, the distribution is considered to be paid out of otherwise taxable income.

Income from Form RRB-1099 should be entered on the Social Security Benefits Worksheet, Lines F, G, and H. This income flows to line 6a of Form 1040. Information from Form RRB-1099-R should be entered on Form 1099-R Worksheet. 

Mark the box for RRB-1099-R at the top of the form. This information will then flow to Line 5a of Form 1040. It's also possible to use the Simplified Method for calculating the portion of the distribution that is tax-free. To do this, scroll to page 3 of the 1099-R Worksheet and begin by entering the Starting date of annuity. ProSeries will calculate the taxable and nontaxable portions and place those values on line 5a and 5b of Form 1040.