When making a lump sum pay out of retiree benefits, does this information need to get reported on a 1099-R or a 1099-MISC?


Q. (cont.) And within that form, which box should be used (i.e Box 3 Other Income or Box 7 Non-Employee Comp on 1099-Misc)? Max pay out was under $100,000.

A. IRS information agent Ms. Dangelo (ID# 1001306043) stated that the form you need to use is 1099-R. You'll put the gross distribution in Box 1, and in Box 2a, you'll put just the taxable amount. This would include any BEFORE-TAX contributions the employee made to his own retirement fund, plus any company contributions. If the employee made after-tax contributions, don't include that portion in Box 2a. You would also check "Total Distribution" in Box 2b. 

She also reminded me that if the employee has not yet reached the age of 59-1/2, there is a 10 percent early withdrawal tax penalty. That would be reflected in the code you put in Box 7.

Have more questions? Submit a request