This blog was last updated on June 27, 2021
The IRS has posted the latest edition of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-sharing Plans, Individual Retirement Accounts (IRAs), Insurance Contracts, etc., as well as new instructions, which also cover Form 5498, IRA Contribution Information. The form has only one change, which is related to the Foreign Account Tax Compliance Act (FATCA).
Beginning with Tax Year 2014, form 1099-R may be used to satisfy FATCA requirements for reporting cash value insurance contracts and annuity contracts. This election is authorized by Section 1.1471-4(d)(5)(i)(B) of the Code of Federal Regulations. There is a specific set of information that must be included on the 1099-R if the election is made, even if that information would not otherwise have been required on the form.
The election may be made by a Participating Foreign Financial Institution (PFFI) or a Registered Deemed-Compliant Foreign Financial Institution (RDC FFI). The account in question must be required to be reported for chapter 4 purposes and it must be a United States account held by a specified U.S. Person. Although other types of accounts may be reported on other 1099 forms for the purpose of satisfying FATCA requirements, the only types of accounts reported for this purpose on the 1099-R form are cash value insurance contracts and annuity contracts.
FFIs will report funds paid for these accounts in Box 1, gross distribution. Also, FFIs must note the account number as part of their Chapter 4 requirements.
This isn’t the first form the IRS has updated for FATCA regulations. The agency revised forms 1099-OID, Original Issue Discount; 1099-MISC, Miscellaneous Income; 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding; and other forms to reflect requirements of the global tax law.
For more information on Form 1099-R, check out our education section.
