1099-R - report when check issued or check received?

[Guest Champ's Mom]

A participant is contesting that a payment made to him on 12/31/08 should not be reported on his 2008 1099R because he received and cashed the check in 2009.

Is there any validity to there being a "gray area" for distributions close to the calendar year end? I've always seen reporting based on date payment issued.

[Guest mjb]

A participant is contesting that a payment made to him on 12/31/08 should not be reported on his 2008 1099R because he received and cashed the check in 2009.

Is there any validity to there being a "gray area" for distributions close to the calendar year end? I've always seen reporting based on date payment issued.

No. Distributions are taxed in the year they are paid by the plan, not the year in which they are received. For example an MRD is deemed paid in 2008 if the check was mailed by Dec 31.

If the participant has a problem he can appeal to the IRS.

[Guest IluvNewComp]

I was always under the assumption it was the check date that drove the 1099.

I don't like that rule, however, because distributions done on the recordkeeping system on Dec 31 are counted in the 5500, but the 1099 is produced for the next year. Lesson? Don't do distributions on the last day of the year?

[Guest mjb]

I was always under the assumption it was the check date that drove the 1099.

I don't like that rule, however, because distributions done on the recordkeeping system on Dec 31 are counted in the 5500, but the 1099 is produced for the next year. Lesson? Don't do distributions on the last day of the year?

If the check is mailed out on the Dec 31 why is the distribution 1099 income for the following year?

What do you mean by the you were under the assumption it was the check date that drove the 1099. What if a check dated Dec 31 is not mailed until Jan 2?

Please explain what you mean by "distributions done on the recordkeeping system on Dec 31 are counted on the 5500 but the 1099 is produced for the next year. "

[K2retire]

I'm only guessing, but on some record keeping systems checks are issued one day and mailed the next. So a check issued 12-31 would never be mailed until the next year.

[BG5150]

Generally, a distribution done on Monday, will get a check date of Tuesday (assuming the trade(s) have settled).

In the case of a distribution processed on 12/31, the check date will be the next business day (1/2 or 1/3), thus in the next year.

I've never came across someone who does checks the same day as a distribution.

[Guest Eric.]

One cannot always assume there is only one date to look at (in this case, the check date): The post does not mention what type of Plan the participant you are referring to is in. There are several arrangements out there that I can think of where the date shares are moved from a Plan's Main (pooled) account to a Participant's sub-account (setup to facilitate the transaction) is the trigger for taxation - not the sale date (or the date the participant decides to keep the shares and move them to his/her private account), or the check date.