Retirement account activity questions

If you completed a rollover (you took a check for your distribution and deposited it within the 60-day limit), the indirect rollover is required to be reported in two parts. The distribution is reported on Form 1099-R, and the rollover (deposit) is reported on Form 5498. Consult your tax professional about how to report the information provided on Form 1099-R and/or how to report the rollover.

If you made a direct electronic transfer from one custodian to another (also known as a trustee-to-trustee transfer) and never took control of funds or securities from your IRA, the activity is not reported to you on any tax forms. In contrast to a rollover, the IRS does not consider a direct electronic transfer to be a distribution, and therefore it is generally not reportable to you or the IRS on Form 1099-R or Form 5498. Generally, you are not required to report a trustee-to-trustee transfer on your income tax return.

As your IRA custodian, Edward Jones does not determine whether a distribution satisfies the requirements for treatment as a QCD. We are required to issue Form 1099-R for the distribution. Consult a tax professional to determine if your distribution is a QCD, how to report the QCD and/or how to report the information provided on Form 1099-R.

Form 1099-R is provided if you received a distribution (regardless of whether you rolled it over), removed excess contributions from your Edward Jones self-directed retirement account, or completed a recharacterization and/or conversion during 2023 from your traditional, Roth, SEP or SIMPLE IRA. Form 1099-R also may be issued for other types of retirement accounts or plans, such as 401(k), 403(b), pension and profit sharing.

If you did not complete one of the activities listed above in your retirement account during 2023, or if the amount involved was less than $10, Edward Jones will not furnish Form 1099-R to you. For amounts less than $10, you may request a copy of Form 1099-R by contacting your Edward Jones client support team.

If you received more than one type of distribution from your IRA or qualified retirement plan, you will receive more than one Form 1099-R. For example, if you turned 59½ during the 2023 calendar year, you could receive one Form 1099-R for distributions taken before age 59½ (distribution code 1) and another Form 1099-R for distributions taken after age 59½ (distribution code 7).

As your IRA custodian, Edward Jones is required to report all distributions taken from an account because of death. As a beneficiary taking distributions from a decedent IRA, you will receive a Form 1099-R reporting the amount withdrawn (distribution code 4).

If you are the spouse beneficiary of a qualified retirement plan and elected to have your benefits roll over to your own IRA in 2023 (after the original account owner’s death), you will receive a Form 1099-R reporting that amount under distribution code G4. The rollover received in the IRA will be reported on your Form 5498.

If you are a non-spouse beneficiary of a qualified retirement plan and elected to have your benefits roll over to an inherited IRA in 2023 (after the original account owner’s death), you will receive a Form 1099-R reporting that amount under distribution code G4. The rollover received in the IRA will be reported on your Form 5498.

Edward Jones is not able to calculate the taxable amount, except in the case of an excess contribution removal for which we know the earnings and can calculate the amount for Box 2a. In all other circumstances, we cannot assume we have all information necessary to calculate the taxable amount for Box 2a.

If your Form 1099-R shows distribution code 1 in Box 7, you may want to review the instructions for IRS Form 5329 to determine if this distribution may be exempt from the 10% early withdrawal penalty.

SIMPLE IRA participants who take distributions before age 59½ may be subject to a penalty unless an exception applies. If you have not been active in the plan for at least two years, the penalty is 25% of the distributed amount in addition to applicable ordinary income tax. For participants who have been in the plan for more than two years, the penalty is 10% of the distribution.

See Form 5329 instructions for information on calculating the penalty.

If Box 4 (Federal Income Tax Withheld) on your Form 1099-R contains a dollar amount other than $0.00, the IRS requires that you include Copy B of Form 1099-R with your tax return. Report the amount of tax withheld from the distribution on Form 1040. See Form 1040 instructions for more information.

If you recharacterized a contribution in 2023, the fair market value of the amount transferred will be reported in Box 1 of your Form 1099-R. The distribution code in Box 7 will indicate whether the original contribution was in the same year or a prior year.

Even if you recharacterized a contribution, Edward Jones is still required to report the original contribution on Form 5498. Please see the instructions for IRS Form 8606 or consult your tax professional for details on reporting.

One reason the IRS may send a taxpayer a letter requesting an additional tax payment is because the taxpayer failed to report distributions from their Roth IRA, reported on Form 1099-R. Earnings distributed from a Roth IRA may be free from taxes and penalties if the account owner meets certain requirements. However, the distribution is still reportable on Form 1099-R and on the individual’s tax return, and Form 8606 may need to be filed to determine the taxability of the distribution. Consult your tax professional about how to report the information on Form 1099-R and/or how to respond to the IRS letter.

Form 5498 is furnished to you if you deposited a contribution or rollover, or completed a conversion or recharacterization during 2023 in your traditional, Roth, SEP or SIMPLE IRA. Form 5498 also reports the fair market value of your IRA account as of Dec. 31, 2023. You may also receive Form 5498 for a deceased individual’s account if you were a beneficiary.

If you did not complete a contribution, rollover, conversion or recharacterization during the tax year, we will not furnish Form 5498 to you. We will report the fair market value of your IRA as of year-end to the IRS, as required. The year-end fair market value is reported to you on your December statement. “No Form 5498 for fair market value (FMV) only” will be displayed on the Tax Forms screen of Online Access.

Form 5498 is typically furnished in May. The IRS provides brokerage firms until May 31 to furnish Form 5498 to capture IRA contributions made by the April 15 deadline. 

Form 5498 is not needed to file your tax return. Yearly IRA contribution totals may be found in the Retirement Summary section of your client statement. When you receive Form 5498, retain a copy and consider providing a copy to your tax professional for their records as well.

Unlike traditional and Roth IRA contributions, SEP and SIMPLE IRA contributions are reported on Form 5498 according to the calendar year in which they were deposited, even if designated for the prior tax year. For example, any contribution made in 2024, whether designated for 2023 or 2024, will be reported on your Form 5498 for 2024, which will be furnished in May 2025.

Edward Jones is required to report the original contribution amount on Form 5498, even if all or part of it was later removed as an excess contribution or recharacterized. The removal or recharacterization is reported on Form 1099-R for the year it was removed.