Empower Tax Notice: Forms 1099-R, 5498, and Filing Steps

Empower issues several IRS tax forms depending on what happened in your accounts during the year. The two most common Empower tax forms are Form 1099-R, which reports money that left a retirement account, and Form 5498, which reports contributions, rollovers in, and the year-end value of an IRA. If you also hold a taxable brokerage account with Empower, you may receive Forms 1099-INT, 1099-DIV, or 1099-B covering interest, dividends, and investment sales. The 1099 forms are due to you by January 31; Form 5498 arrives by May 31 because IRA contributions for the prior year can be made up to the April filing deadline.1Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

Form 1099-R: Money That Left a Retirement Account

Empower files Form 1099-R any time $10 or more leaves your retirement account during the calendar year.1Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. That covers withdrawals, rollovers to another account, required minimum distributions, Roth conversions, and a 401(k) loan you failed to repay (which the IRS treats as a distribution). If more than one type of distribution happened in the same year, you may receive multiple 1099-R forms for the same account.

Four boxes do most of the work:

  • Box 1 shows the gross distribution — the total paid out before any taxes were withheld.
  • Box 2a shows the taxable amount included in your gross income. On a direct rollover, this is often zero.
  • Box 4 shows any federal income tax Empower withheld. It counts as a credit against your total tax bill when you file.
  • Box 7 shows the distribution code, a one- or two-character label that tells the IRS why the money came out. The code drives whether you owe ordinary income tax, a penalty, or nothing at all.

What the Box 7 Distribution Code Means

The code in Box 7 controls the tax treatment of the entire distribution. The codes Empower uses most often:2Internal Revenue Service. Instructions for Forms 1099-R and 5498

  • Code 1 — early distribution, no known exception. You were under 59½ and the plan identified no reason to waive the 10% early withdrawal penalty. The distribution is taxable as ordinary income and subject to the penalty unless you separately claim an exception on Form 5329.3Internal Revenue Service. Instructions for Form 5329 – Additional Taxes on Qualified Plans Including IRAs and Other Tax-Favored Accounts
  • Code 2 — early distribution, exception applies. You were under 59½, but the plan identified a reason the 10% penalty does not apply. This code also covers Roth IRA conversions when you are under 59½.
  • Code 3 — disability. The distribution was made because you meet the IRS definition of permanently and totally disabled.
  • Code 4 — death. The payment went to a beneficiary, estate, or trust after the account owner’s death. The 10% early withdrawal penalty does not apply regardless of the beneficiary’s age.
  • Code 7 — normal distribution. You were 59½ or older. Taxable as ordinary income with no early withdrawal penalty. This code is also used for Roth conversions when you are 59½ or older.
  • Code G — direct rollover. Funds moved directly from one qualified plan to another or to an IRA. Generally not taxable.

The code is not the final word. If you qualified for a penalty exception but your 1099-R shows Code 1, you can still claim the exception by filing Form 5329 with your return.4Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions

Withholding and the Rollover Trap

What appears in Box 4 depends on the type of account. If you take money out of a 401(k) or other employer plan and have it paid to you rather than rolling it directly into another account, the plan must withhold 20% for federal taxes.5Office of the Law Revision Counsel. 26 USC 3405 – Special Rules for Pensions, Annuities, and Certain Other Deferred Income You cannot opt out of this withholding on an eligible rollover distribution paid to you. The only way around it is a direct rollover, where the money goes from one plan to the next without passing through your hands.

IRA distributions work differently. The default federal withholding rate is 10%, and you can elect a different rate or opt out entirely. Opting out does not eliminate the tax bill; it just defers it to filing time, and a large IRA distribution with no withholding can trigger an underpayment penalty.

State tax withholding depends on where you live, since each state sets its own rules. Box 14 shows any state tax withheld, and Box 15 identifies the state.

If your 1099-R shows a distribution you intended to roll over, you have 60 days from the date you received it to deposit it into another eligible retirement account.6Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions Miss that window and the entire amount becomes taxable, plus the 10% penalty if you are under 59½. The 20% mandatory withholding complicates this. Cash out $50,000 from a 401(k) intending to roll it to an IRA, and the plan withholds $10,000 and sends you $40,000. To complete a full rollover you must deposit $50,000 within 60 days, meaning you have to come up with the extra $10,000 from your own pocket. Deposit only the $40,000 you received and the missing $10,000 is treated as a taxable distribution. You will get the withheld amount back as a credit when you file, but the tax on the shortfall is permanent. Direct rollovers avoid this entirely.

The IRS can waive the 60-day deadline in limited situations where circumstances beyond your control caused the delay, but counting on a waiver is not a plan.

Form 5498: IRA Contributions and Year-End Value

If you hold a Traditional, Roth, SEP, or SIMPLE IRA through Empower, you will receive Form 5498 each year.7Internal Revenue Service. About Form 5498 – IRA Contribution Information It tracks money going in and reports the account’s year-end value. You do not attach it to your return, but what you claim should match what it shows.

  • Box 1 reports Traditional IRA contributions for the tax year, up to the annual limit of $7,000 in 2026 ($8,000 if you are 50 or older). Deductibility depends on your income and whether you are covered by an employer plan.8Internal Revenue Service. Retirement Topics – IRA Contribution Limits
  • Box 2 reports rollover contributions in — the receiving side of a rollover reported on a 1099-R.
  • Box 3 reports Roth conversion amounts, generally taxable and expected to match the corresponding 1099-R.
  • Box 5 reports the fair market value as of December 31. The IRS uses this figure as the starting point for calculating your required minimum distribution for the following year.
  • Box 10 reports Roth IRA contributions, which establish your cost basis for future tax-free withdrawals.9Internal Revenue Service. Form 5498 – IRA Contribution Information

Box 11 contains a checkbox indicating whether an RMD is due for the upcoming year. Box 12b shows the calculated RMD amount and Box 12a shows the deadline. Empower may provide the RMD figure in a separate statement rather than in Boxes 12a and 12b. If Box 11 is checked and you skip the distribution, you face a steep excise tax on the amount you failed to withdraw.

When money moves from one retirement account into an IRA, the transaction shows up twice: on a 1099-R from the sending account (often with Code G) and on a 5498 from the receiving IRA (in Box 2). The amounts should match. If they do not, the mismatch needs to be explained on your return.

Brokerage Account Forms

A taxable brokerage account with Empower generates its own set of 1099s, separate from anything in your retirement plan:

One cost-basis detail on the 1099-B is worth checking. For “covered” securities, generally shares bought after 2011 for stocks (later dates for mutual funds and bonds), the broker reports your cost basis to both you and the IRS. For “noncovered” securities bought before those dates, the cost basis goes only to you, and you have to figure it out and report it. If the cost basis column is blank or marked “noncovered,” do not leave it off your return. The IRS will see the sale proceeds and treat the entire amount as a gain.

Qualified Charitable Distributions Will Not Show Up Separately

If you are 70½ or older and sent money from your IRA straight to a qualifying charity, that qualified charitable distribution can be excluded from your taxable income up to $108,000 per year (adjusted annually for inflation).13Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements Empower’s 1099-R will not distinguish a QCD from any other distribution. It will show the full amount in Box 1, typically with Code 7, looking identical to a normal taxable withdrawal.

Identifying the QCD on your return is on you. Report the full distribution on Form 1040 line 4a, enter only the taxable portion (excluding the QCD) on line 4b, and write “QCD” next to that line.14Internal Revenue Service. Seniors Can Reduce Their Tax Burden by Donating to Charity Through Their IRA If the entire distribution was a QCD, line 4b is zero. Do not also claim the gift as an itemized deduction on Schedule A. Keep the charity’s written acknowledgment, because you will need it if the IRS asks questions.

Where Each Form Goes on Your Return

IRA distributions from a 1099-R go on Form 1040 line 4a (gross) and line 4b (taxable). Distributions from employer plans such as 401(k)s and 403(b)s go on lines 5a and 5b instead. The IRS tracks these separately, and entering amounts on the wrong line can trigger a mismatch notice.

Federal tax withheld from Box 4 of any 1099-R gets added to your other withholdings on Form 1040 line 25b, reducing your tax owed or increasing your refund regardless of how the distribution itself is taxed.

With Code 1 in Box 7, you have two paths. If you owe the 10% early withdrawal penalty on the full amount, you can report it on Schedule 2 line 8 without filing Form 5329.3Internal Revenue Service. Instructions for Form 5329 – Additional Taxes on Qualified Plans Including IRAs and Other Tax-Favored Accounts If you qualify for an exception, such as medical expenses above a certain threshold or separation from service after age 55, file Form 5329 to claim it and reduce or eliminate the penalty.4Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions

Form 5498 is not attached to your return, but it is your backup documentation. If you claimed a Traditional IRA deduction on Schedule 1, the contribution in Box 1 should match. A Roth conversion in Box 3 should reconcile with the 1099-R that reported the same conversion. The fair market value in Box 5 is what you will use the following year to calculate any RMD. Keep every 5498 until you have fully withdrawn from the account, particularly for Roth IRAs, where tracking your basis over decades determines whether future withdrawals are tax-free.

Missing, Late, or Corrected Forms

If January 31 passes and no expected 1099-R has arrived, check that Empower has your current mailing address and look at your electronic delivery settings. If the form is genuinely missing, contact Empower to request a duplicate.

If you need to file before the form arrives, the IRS allows Form 4852 as a substitute, filled in with your best estimate of the distribution and withholding based on your own records.15Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect If the real form later shows different numbers, file an amended return on Form 1040-X.

Corrected forms work the same way. If Empower discovers an error on a form already sent, they issue a replacement marked “CORRECTED.” Compare it against the original, and if you already filed, submit a 1040-X with the new figures. Ignoring a corrected form is a reliable way to trigger an IRS notice, because the agency matches the corrected data to your return and flags any discrepancy automatically.