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Form 1099 Frequently Asked Questions

General Questions

Form 1099-R

Form 1099-Q

Form 1099-SA



General Questions

What is the purpose of Form 1099?

The IRS requires that any distribution taken from your tax-advantaged savings account last year be reported on an IRS Form 1099.

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What is Principal Trust Company's role?

We serve as trustee of your retirement plan and are partnered with your broker who handles your investment needs for your plan. As trustee of your plan, we are required to report distributions to the IRS that you took from your plan last year. Principal Trust CompanySM is the trade name of Delaware Charter Guarantee & Trust Company.

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What do I do with this form?

When you file your federal and state returns, you may need to attach a copy of this form to your returns.

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When does Principal Trust Company send this information to the IRS?

By law, this information will be provided to the IRS by March 31 of the year following the year in which the distribution occurred.

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What do I do if I have already filed my taxes and did not report this amount?

You may need to file an amended return that includes the information contained on this form. Consult your tax or legal advisor for further information.

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Why was I sent this form for the amount I received from a deceased/divorced person's account?

The IRS requires all assets received by an individual from an account due to death or divorce be reported on this form.

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When will the correction box be checked on this form?

Any changes after Principal Trust Company provides distribution information to the IRS (late March) will result in a new form issued with the correction box checked. This corrected information will also be provided to the IRS.

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Where did Principal Trust Company get the data to complete the Form 1099?

We received information for your Form 1099 from various sources, including:

  • Investment account statements
  • Checks we received

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How do I change my tax election on periodic payments?

Review your elections each year to ensure you are paying sufficient tax through withholding - your tax election stays in force until you revoke it. You can change your tax elections on periodic payments (set up on a weekly, monthly, quarterly or annual basis) at any time, and you can choose to have no federal tax withheld. If you wish to change your election, please contact your brokerage firm for the appropriate form. Please see Publication 505 for more information.

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Why was "Taxable amount not determined" (Box 2b) checked when an amount appears in the "Taxable Amount" (Box 2a) field? (1099-R only)

The IRS requires that the full amount of your distribution is reported in Box 1 (Gross distribution) and in box 2a (Taxable amount). Box 2b (Taxable amount not determined) is checked because you may have made non-deductible contributions to your IRA and the IRS does not require us to compute the taxable amount of a traditional, SEP or Simple IRA.

For qualified employer plans, the taxable amount can be determined so Box 2b will not be checked. Please consult with your tax advisor or legal counsel to determine if you made non-deductible IRA contributions.

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Form 1099-R

What is Form 1099-R?

The IRS requires that we report any distributions you took from your retirement plan last year (even if you rolled them into another plan) to you on IRS Form 1099-R. We will send this same information to the IRS.

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Why was money withheld for taxes?

For a distribution from an IRA account, the IRS requires withholding of 10% for federal withholding, unless you elected in writing not to have taxes withheld.

For an employer-sponsored plan, 20% federal withholding is required from any distribution eligible to be rolled into another qualified plan or IRA. State taxes may have been withheld if required by the state in which you reside.

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Why is my refund of an over-contribution to my IRA or qualified retirement plan being reported on Form 1099-R?

The IRS requires us to report all assets removed from a retirement account. The taxability of your over-contribution refund depends upon whether you had taken a deduction for your contribution. The tax code used to describe the distribution is:

  • Code P: Removed excess in 2013 and excess was contributed in 2012.
  • Code 8: Removed excess in 2013 and excess was contributed in 2013.

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Why am I receiving a 1099-R form on a distribution from my employer's retirement plan that was rolled directly into an IRA?

This is called a direct rollover. We are required to report the assets leaving the employer plan on Form 1099-R. Your successor trustee is required to report a rollover contribution of the same assets on IRS Form 5498. You may want to contact them to ensure that they will be reporting the rollover properly.

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Why did I receive a 1099-R form for my rollover from one IRA to another IRA?

A rollover occurs when money is distributed from one tax-deferred account and deposited within 60 days to another tax-deferred account. The trustee of the receiving IRA will issue a Form 5498 that will tell the IRS that you deposited the money into another IRA.

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Why did I receive a 1099-R for my recharacterization/conversion?

If you convert or recharacterize assets from one type of IRA to another, the amount is subject to income tax. As in the case of a rollover, with a recharacterization, the trustee of the second IRA (to which the contribution was converted) will issue a Form 5498. That form tells the IRS that you deposited the money into another IRA.

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Form 1099-Q

What is Form 1099-Q?

The IRS requires we report to you on IRS Form 1099-Q any distributions that you took from your Coverdell ESA last year. We will be sending this same information to the IRS. When you file your federal and state tax returns, you may need to include information reported on this form.

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Why is there no Earnings (Box 2) or Basis (Box 3) on my Form 1099-Q?

For Coverdell ESA distributions made in 2012 we are not required to report amounts in Boxes 2 and 3. Instead we may report the fair market value of your Coverdell ESA as of December 31, 2013, in the blank box below Boxes 5 and 6.

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Why is there no Fair Market Value (FMV) on my Form 1099-Q?

We rely on your investment firm to provide this information to us. This data was not available at the time your Form 1099-Q was printed for this mailing.

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Why is my refund of an over-contribution from my ESA being reported on Form 1099-Q?

The IRS requires us to report all assets removed from a Coverdell ESA. Because contributions to a Coverdell ESA are not deductible, only the earnings are taxable. The IRS does not require the use of tax codes on Form 1099-Q.

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Form 1099-SA

What is Form 1099-SA?

The IRS requires we report to you on IRS Form 1099-SA any distributions that you took from your Health Savings Account last year. We will be sending this same information to the IRS. When you file your federal and state tax returns, you may need to include information reported on this form.

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Why is my refund of an over-contribution from my Health Savings Account being reported on Form 1099-SA?

The IRS requires us to report assets removed from a Health Savings Account. The excess contribution is not taxed when distributed, but the net income attributable is attributable as income for the tax year in which the distribution occurs. Consult your tax or legal advisor for further information.

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