1099R Reporting for Housing Allowance

[JOH]

How would you report a distribution from a church plan that was made associated with housing allowance and the minister was under the age of 59.5 on a 1099R.  Would use code 1 or 2?  Also, does anyone have the guidance on why that code would be used?

[Peter Gulia]

The reporting is less about that code 1-or-2 point and more about whether the church plan’s administrator or withholding agent reports a distribution’s taxable amount.

 

Some get a church’s designation of an amount of retirement pay that could be treated as an IRC § 107 parsonage allowance and information from the minister, and use those to report a taxable amount less than the gross distribution amount.

 

But many find that the reporter is “unable to reasonably obtain the data needed to compute the taxable amount”, and mark box 2b as “taxable amount not determined”.

 

The minister then reports on Form 1040 the amount the minister finds is the taxable portion of her distribution.

 

It might not matter that a 1099-R displays a code that would alert the IRS to look for a too-early tax if the distribution’s taxable amount is $0.