IRA Withdrawal Tax Forms: 1099-R, 8606, 5329, and W-4R

Any withdrawal from an IRA produces at least one tax form and often several. Your custodian sends you Form 1099-R reporting what came out. Depending on the circumstances, the IRA withdrawal tax forms you may also need to file are Form 8606 (to calculate the taxable portion when you have nondeductible contributions or take a Roth distribution), Form 5329 (to report or claim an exception to the 10% early-withdrawal penalty, or to report a missed required minimum distribution), and Form W-4R (to set your federal withholding rate before the money leaves the account). All of these feed into Form 1040, where IRA distributions land on Lines 4a and 4b.

Form 1099-R: What Your Custodian Reports

Your IRA custodian is required to send you Form 1099-R for any distribution of $10 or more during the calendar year.¹ You should receive it by the end of January following the year of the withdrawal. The IRS gets its own copy, so the numbers on your return need to match.

Four boxes carry most of the weight:

Box 1, Gross Distribution: the total amount withdrawn before any withholding.
Box 2a, Taxable Amount: the portion the custodian considers taxable. This figure is not always right for someone who made nondeductible contributions, because the custodian may not have your full contribution history. You may need to recalculate it yourself using Form 8606.
Box 4, Federal Income Tax Withheld: any federal tax already taken out before you received the money.
Box 7, Distribution Code: a one- or two-character code telling the IRS what kind of withdrawal this was.²

The Box 7 code drives much of what happens next. Code 1 means early distribution with no known exception, which flags the withdrawal for the 10% additional tax if you were under 59½. Code 7 means a normal distribution taken at or after 59½. Code 4 means the distribution was paid to a beneficiary after the account holder’s death. If the code is wrong, don’t ignore it. You can still claim the correct treatment on Form 5329, but an unaddressed incorrect code can generate an automated IRS notice.²

Form W-4R: Choosing Your Withholding Rate

Before your custodian releases the money, you can choose how much federal income tax to withhold. If you submit no election, the default rate is 10% of the distribution.³ That may be too much or too little depending on your overall bracket.

Form W-4R lets you pick any rate from 0% to 100%. You can elect zero withholding if you’d rather handle the tax bill at filing. Underwithholding significantly can trigger an estimated tax penalty. On the other side, a large withdrawal that pushes you into a higher bracket won’t be covered by the 10% default. Whatever your custodian withholds shows up in Box 4 of the 1099-R and gets credited toward your total tax on Form 1040.³ You give Form W-4R to your custodian; it isn’t filed with the IRS.

Form 8606: Calculating the Taxable Portion

You need to file Form 8606 if you receive a distribution from a Traditional IRA and your basis (total nondeductible contributions) is greater than zero, or if you receive a distribution from a Roth IRA.⁴ The form tracks your basis across all your Traditional IRAs and calculates how much of your withdrawal is taxable.

Traditional IRAs and the Pro-Rata Rule

Money you pull from a Traditional IRA is generally taxed as ordinary income, because most contributions went in pre-tax.⁵ If you made nondeductible contributions, that portion has already been taxed and shouldn’t be taxed again. Form 8606, Part I, sorts out how much of each withdrawal is a tax-free return of basis.

You can’t cherry-pick and withdraw only your nondeductible contributions. Every distribution is treated as a proportional mix of taxable and nontaxable dollars based on the ratio of your total basis to the total value of all your Traditional IRAs. If your combined Traditional IRA balance is $200,000 and $40,000 represents nondeductible contributions, 20% of any withdrawal is tax-free and 80% is taxable, regardless of which specific account you draw from.

Record-keeping matters more than most people expect. You need to know your cumulative nondeductible contributions going back years or decades. The IRS doesn’t track this for you. If you can’t prove your basis, the entire distribution may be treated as taxable. A Form 8606 from each prior year you made nondeductible contributions is the best documentation, so keep those returns. Skipping Form 8606 when it’s required carries a $50 penalty, and the practical cost is losing track of your basis and paying tax twice on the same money.⁴

Roth IRAs and Part III

Roth distributions follow different rules because contributions go in with after-tax dollars. A qualified distribution comes out entirely tax-free.⁶ It’s qualified when the Roth has been open for at least five tax years (counting from January 1 of the year of your first contribution) and you’re at least 59½, disabled, or using up to $10,000 for a first-time home purchase.⁷

If the distribution isn’t qualified, ordering rules kick in. Money comes out in this order: regular contributions first (always tax- and penalty-free), then conversion and rollover amounts (taxable portion of each conversion before its nontaxable portion, with each conversion carrying its own five-year clock for the 10% penalty), and earnings last. Only earnings can be taxed, and only earnings can trigger the early-withdrawal penalty.⁷

In practice, if you’ve contributed $50,000 to your Roth over the years and it’s now worth $70,000, any withdrawal of $50,000 or less is just a return of contributions with no tax, no penalty, and no age requirement. Only once you dip into the $20,000 in earnings does taxation come into play. Non-qualified earnings are taxed as ordinary income and may face the 10% penalty. You report the calculation in Part III of Form 8606.⁴

Form 5329: Early-Withdrawal Penalty and Missed RMDs

Take money out of a Traditional IRA before age 59½ with no exception, and you owe a 10% additional tax on the taxable portion, on top of regular income tax.⁸ Form 5329 is where you calculate that penalty or, more usefully, claim an exception.

Your 1099-R may show Code 1 in Box 7 even when an exception applies, because the custodian often doesn’t know why you’re withdrawing. Claiming the exception is your job. On Part I of Form 5329, you enter the early distribution amount on Line 1, then enter the exempt amount on Line 2 along with the exception number that applies. The IRS instructions list over 20 exception codes.

The exceptions IRA owners use most often include:⁹

First-time home purchase, up to $10,000 over your lifetime.
Qualified higher education expenses (tuition, fees, books, room and board) for you, your spouse, children, or grandchildren.
Unreimbursed medical expenses exceeding 7.5% of adjusted gross income.
Health insurance while unemployed, if you received unemployment for at least 12 weeks.
Total and permanent disability as defined by the IRS.
Substantially equal periodic payments based on life expectancy. Once started, you must continue for five years or until 59½, whichever is later.
Birth or adoption, up to $5,000 per child.
Federally declared disaster, up to $22,000 for qualifying losses.
Domestic abuse victim, up to the lesser of $10,000 or 50% of the account value.
Emergency personal expense, up to $1,000 per year.

Each exception has its own rules, and some require documentation. Substantially equal periodic payments are unforgiving: modify the schedule before the required period ends and the 10% penalty applies retroactively to every prior distribution in the series.

One trap on the early-withdrawal side: pull money from a SIMPLE IRA within the first two years of your initial contribution and the penalty jumps from 10% to 25%.

Form 5329 also handles the other end of life. If you miss a required minimum distribution, you report the shortfall on Part IX. The excise tax is 25% of the amount you should have withdrawn but didn’t, dropping to 10% if you catch and correct the mistake within two years.¹⁰ Roth IRAs do not require RMDs during the original owner’s lifetime.

Where It All Lands on Form 1040

After working through the 1099-R, Form 8606, and Form 5329 as needed, the final numbers move to Form 1040. Line 4a shows the total gross distribution from all your IRAs during the year. Line 4b shows only the taxable portion.¹¹ When the two differ, because of nondeductible contributions, a rollover, or a Roth distribution, the IRS expects supporting forms explaining the gap.

If you rolled the full distribution into another retirement account within 60 days, the custodian still issues a 1099-R because money left the account, but you show the gross amount on Line 4a, zero on Line 4b, and write “ROLLOVER” next to it.¹² If a Traditional IRA withdrawal is partially taxable because of nondeductible contributions, the Form 8606 calculation determines Line 4b.

Which Forms Apply to Your Situation

Not every IRA withdrawal requires every form. A quick reference:

Every IRA withdrawal: Form 1099-R from your custodian, reported on Form 1040 Lines 4a and 4b.
Traditional IRA with nondeductible contributions: Form 8606, Part I, to calculate the taxable portion using the pro-rata rule.
Roth IRA distribution that isn’t qualified: Form 8606, Part III, to determine if any earnings are taxable.
Early withdrawal before 59½: Form 5329, Part I, to pay the 10% additional tax or claim an exception.
Missed required minimum distribution: Form 5329, Part IX, to calculate the excise tax on the shortfall.¹³
Choosing your withholding rate before withdrawal: Form W-4R submitted to your custodian, not the IRS.

Keep copies of every Form 8606 you file, including years when you made nondeductible contributions without taking distributions. Those forms are the cumulative record of your basis, and reconstructing them from bank records years later is much harder than holding onto the originals.

1
Office of the Law Revision Counsel. 26 U.S. Code 6047 – Information Relating to Certain Trusts and Annuity Plans
2
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
3
Internal Revenue Service. 2026 Form W-4R
4
Internal Revenue Service. Instructions for Form 8606 (2025)
5
Internal Revenue Service. Traditional IRAs
6
Internal Revenue Service. Roth IRAs
7
Internal Revenue Service. 2025 Publication 590-B
8
Internal Revenue Service. Instructions for Form 5329 (2025)
9
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
10
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
11
Internal Revenue Service. Line-by-Line Instructions Free File Fillable Forms
12
Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Distributions (Withdrawals)
13
Internal Revenue Service. About Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts