New 1099 form for ESAs and 529 Plans

[Appleby]

Effective for tax years beginning 2003, distributions from Education Savings Accounts and 529 plans will no longer be reported on Form 1099-R. The IRS has issued the 2003 version of Form 1099-Q. This form will be used to report distributions from Education Savings Accounts and 529 plans

Form 1099-Q. can be viewed at the following URL http://www.irs.gov/pub/irs-pdf/f1099q03.pdf

The instructions for filing form 1099-Q, http://www.irs.gov/pub/irs-pdf/i1099q02.pdf

[Guest Derelict]

I'm rather shocked that this hasn't created more of a stir. (am i missing another thread??? Search didn't show much else).

Is there something behind the scenes that I don't know about that these 1099-Q reporting requirements will all get tossed?

Reporting concerns

1) Earnings

2) Basis

3) TTEE to TTEE transfers and how to transfer the above info

Operationally this is a mess. Issued in Feb `03 for `03 reporting? Even if this was for `04 on I do not think it would be reasonable request for systems to handle...

- D

[Appleby]

The IRS has just issued Notice 2003-53 (attached) , in which it is provided (among other things) that the Custodian/Trustee is not required to report the earnings on ESAs on IRS Form 1099-Q. This relief is for tax year 2003. Further, the IRS provides that if the Custodian/Trustee does not have records indicating whether a gross distribution from an ESA made in 2003 was a trustee-to-trustee transfer, we may leave box 4 of Form 1099-Q blank.

Earnings on excess contributions are required to be reported .

The document also addresses FMV reporting

The IRS expects to publish further guidance about required reporting for ESA distributions made in 2004 and future years.

IRS_Notice_2003_53.pdf

[jevd]

Thank you for the post. Its good news for all of us who offer ESAs. It would be a good idea for all of us who offer these plans to send comments to the service.

[jevd]

Appleby,

What is your inside source. Trade Secret? I can't locate any other published source. Not in current IRS Bulletins that I can see. Thanks so much again for making our reporting staff's week end.

[Appleby]

Hi jevd,

You’re welcome.

About the source...I have a friend who has a friend .

I was just told that it has been published so you may be able to find it in published sources.

Regarding the submission of comments…,I agree. With Benefitslink being as popular as it is, it would be great if Dave could add some sort of means where we could submit a preformatted letter with our comments via e-mail- just by filling in your name etc and clicking on a button. I am sure there would be others who would be willing to assist with preparing the letter.

In any event, we also offer these plans and will be submitting comments

[Appleby]

The IRS issued amended Form 1099-Q for 2003. The amendment includes instructions to include distribution codes for death, disability, etc.…use of these codes are optional

Box 4 has also been changed- it now says trustee-to-trustee transfer.

http://www.irs.gov/pub/irs-pdf/i1099q03.pdf

http://www.irs.gov/pub/irs-pdf/f1099q03.pdf

[Guest Derelict]

/me chuckles and looks for the "Cannot determine any of this stuff" Box.

[Appleby]

The 2004 version of 1099-Q, 5498-ESA and their instructions are available.

There was some concern whether the rules for reporting earnings and BASIS for ESA distributions would change. Thank goodness, they have not.

http://www.irs.gov/pub/irs-pdf/i1099q.pdf

http://www.irs.gov/pub/irs-pdf/f1099q.pdf

http://www.irs.gov/pub/irs-pdf/f5498e.pdf

http://www.irs.gov/pub/irs-pdf/i5498e.pdf