5 Things You Need to Know About Fidelity 1099-R Payer Information
Are you expecting a 1099-R form from Fidelity this tax season? Whether you’re a retiree or just starting out on your investment journey, understanding how to decipher the information on this form can save you time and money when filing your taxes. Here are five key things you need to know about Fidelity 1099-R payer information.
1. What is a 1099-R form?
A 1099-R form is a tax document that reports distributions made from a retirement account, such as an IRA or a 401(k). The form includes important information, such as the amount of the distribution, the type of account, and the taxable amount, if any. You’ll need this form when you file your taxes to report income from retirement accounts.
2. Fidelity’s 1099-R form
Fidelity is one of the largest providers of retirement accounts in the United States, with over 32 million customers. If you have a retirement account with Fidelity, you’ll receive a 1099-R form from them if you took a distribution from your account in the previous tax year. The form will be available online in mid-January and mailed out by the end of the month.
3. Understanding the codes on the form
One of the most confusing aspects of the 1099-R form is the series of codes used to identify the type of distribution. Fidelity will use one or more of these codes to describe your distribution. Some of the most common codes include:
– 1: Early distribution, no known exception
– 7: Normal distribution
– G: Direct rollover
Understanding these codes is important for determining the tax implications of your distribution. For example, early distributions may be subject to a 10% penalty on top of regular income taxes.
4. The importance of the basis
If you have made after-tax contributions to your retirement account, you’ll want to pay close attention to the basis reported on your 1099-R form. The basis is the amount of your contributions that have already been taxed and therefore won’t be taxed again when you take a distribution. Fidelity will report your basis in Box 5 of the form, and you’ll need to use that amount to calculate the taxable portion of your distribution.
5. Double-checking the accuracy of the form
Fidelity strives to provide accurate and timely information on their 1099-R forms, but mistakes can happen. It’s important to review your form carefully to make sure all the information is correct, including your personal details, account information, and codes used to describe your distribution. If you notice an error, contact Fidelity right away to get it corrected before filing your taxes.
In conclusion, understanding the information on a 1099-R form from Fidelity can help you avoid costly mistakes when filing your taxes. By paying close attention to the codes, your basis, and the accuracy of the form, you’ll be better equipped to handle this important tax document. Happy filing!
