Update your plan records first
Record the distribution in your plan ledger before anything leaves the account: the participant account funds were drawn from, the amount, the date, and the distribution type. Where the plan holds multiple participant accounts, whether pre-tax, Roth, or separate spousal accounts, each is tracked separately.
File the completed Distribution Request form with your plan records. Internal documentation is what supports every external filing that follows, and reconstructing it later is considerably harder than capturing it at the time.
Issue Form 1099-R to the IRS and the participant
Form 1099-R reports the distribution to both the IRS and the participant, which in most cases is you. As plan administrator, you produce it.
The participant copy is due by January 31 of the year following the distribution. The IRS copy is due by February 28 on paper, or March 31 if filed electronically.
The form calls for the gross distribution amount, the taxable amount, and a distribution code. That code tells the IRS whether the distribution is qualified, subject to the early withdrawal penalty, a direct rollover, or something else. Codes drive how the IRS reads the entire transaction, so confirm the right one with your CPA when the situation is not clearly routine.
File Form 945 for withholding
Form 945 reports all federal income tax withheld from non-payroll distributions during the year, covering the amounts you deposited through EFTPS at the time of each distribution. It is due by January 31 of the following year. No distributions during the year means no Form 945 to file.
Report the distribution on your personal return
The distribution belongs on your personal federal tax return for the year received. Amounts from the 1099-R carry to your return and determine both the taxable income and any penalty owed. Roth distributions meeting the qualified distribution requirements are excluded from income.
Include total distributions on Form 5500-EZ
Form 5500-EZ is required if total plan assets exceed $250,000 at the end of the plan year. Total distributions taken during the year are one of the line items on that return.
The deadline is July 31 of the following year for calendar-year plans. A final Form 5500-EZ is also required when you terminate the plan, whatever the plan value.
Frequently Asked Questions
What happens if I miss the Form 1099-R deadline?
Late filing penalties apply per form, and they increase the longer the form goes unfiled. Filing late is still substantially better than not filing, since the penalty for intentional disregard is materially higher than the penalty for a late return.
Do I still file Form 1099-R for a direct rollover to an IRA?
Yes. A direct rollover is a reportable distribution even though nothing is taxable. It is reported with the distribution code that identifies it as a direct rollover, which is how the IRS reconciles the money leaving your plan against the receiving custodian's Form 5498.
Does a participant loan generate a Form 1099-R?
Not while the loan performs. A loan that defaults becomes a deemed distribution, which is reportable on Form 1099-R for the year of default with the corresponding code, even though no funds actually left the plan at that point.