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Workers & Retirees

IRS Form 1099-R Frequently Asked Questions

    • Q1: Is my pension plan a tax-qualified plan under IRS rules?

      A1: Most likely, yes. PBGC treats the pension plans it insures as qualified.

    • Q2: Why did I receive two IRS Forms 1099-R?

      A2 (a): In the first year after PBGC takes over your pension plan's payments, you may receive two forms: one from the prior plan administrator for the payments they issued, and one from PBGC for the payments we made.

      For example: If PBGC started paying your monthly payments in September, but you'd received monthly payments from the prior plan administrator from January until August, you'd receive two Forms 1099-R: one from the prior plan administrator representing 8 months' payments (January-August), and one from PBGC representing 4 months' payments (September-December).

      A2 (b): Or, PBGC may have issued your regular periodic (usually monthly or annual) payments and an additional large reimbursement (also known variously as a back payment, one-time payment, lump-sum, or non-periodic payment) to make up for missed payments. These large reimbursements receive different tax treatment and are reported on a separate IRS Form 1099-R.

    • Q3: Why can't PBGC determine the taxable amount; what is my taxable amount?

      A3: For most pension plans the taxable amount of the benefit equals the gross amount.

      However some pension plans offer benefits that contain non-taxable amounts, such as plans with mandatory employee contributions, also called after-tax contributions or employee contributions. Since we may not have received all of the information needed to accurately determine the taxable amount for these plans, we don't report it, as permitted by the IRS.

      If you were a participant in one of these pension plans, please:

      • Consult IRS Publication 575, "Pension and Annuity Income," to calculate your taxable amount, or
      • Contact PBGC with questions (MyPension@pbgc,gov).
    • Q4: How does PBGC determine the distribution code that goes on my Form 1099-R?

      A4: PBGC determines the distribution code based on the information we have. If you feel a correction is necessary, you may either:

      • File IRS Form 5329, "Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts," or
      • Contact PBGC at MyPension@pbgc.gov and request a corrected Form 1099-R.

      For periodic payments, PBGC uses the following codes:

      • Code 2 - You were under age 59½ as of December 31.
      • Code 3 - You received a disability pension provided under your pension plan.
      • Code 4 - You received benefits as a beneficiary after the death of the plan participant and you requested code 4; otherwise PBGC uses codes 7 or 2.
      • Code 7 - You were at least age 59½ on December 31.

      For one-time payments, PBGC uses the following codes:

      • Code 1 - You were under age 59 ½ on the payment date and an exception does not apply
      • Code 2 - You were under age 59 ½ on the payment date and one of the following exceptions applies:
        • You separated from service (from the employer who sponsored the plan) in or after the year you reached age 55 and the payment was made after your separation date,
        • The payment was made due to an IRS levy, or
        • You are an alternate payee under a qualified domestics relations order;
      • Code 3 - You received a disability pension provided under your pension plan.
      • Code 4 - You received benefits as a beneficiary after the death of the plan participant and:
        • the payment is made to the participant's estate, or
        • the check advice line states "Death Benefit."
      • Code 7 - You were at least age 59 ½ on the payment date;
      • Code A - The participant was born before 01/02/1936 (may be used with code 4 or 7);
      • Code G - Your payment was directly rolled over to an IRA or another retirement plan (may be used with code 4); or
      • Code L - You had a loan under the plan that was treated as a distribution (may be used with code 1 or 4).