What Form Do You Need for an IRA Distribution?

Most IRA distributions run through three IRS forms. Form 1099-R, which your custodian sends you, reports what came out of the account. Form 8606 tracks any after-tax money in a traditional IRA so you aren’t taxed twice, and it also handles Roth conversions and nonqualified Roth withdrawals. Form 5329 calculates the 10% early-withdrawal penalty and the 25% penalty for a missed required minimum distribution, and it’s also where you claim exceptions. All three feed into Form 1040. Which of them you actually need depends on your age, whether you have after-tax basis, and what you did with the money.

Form 1099-R: The Distribution Statement You’ll Receive

Federal law requires every IRA custodian to report distributions to both you and the IRS.¹ That reporting happens through Form 1099-R, which your brokerage or bank must send or make available by January 31 of the year after the distribution. If you don’t have yours by early February, check your custodian’s online tax center before requesting a paper copy.

Four boxes carry most of the information you need:

Box 1 shows the gross distribution, the total that left the account before any withholding.
Box 2a shows the taxable amount as the custodian sees it. If the custodian can’t determine taxability, this box may be blank, and the calculation falls to you.
Box 4 shows federal income tax already withheld.
Box 7 contains a one- or two-character distribution code explaining the nature of the withdrawal.

Box 7 drives how the IRS initially classifies the payment. Code 7 means a normal distribution from someone age 59½ or older. Code 1 flags an early distribution that may trigger the 10% penalty. Code G indicates a direct rollover to another retirement account, which generally isn’t taxable. Code 4 marks a death-related distribution to a beneficiary.² If the code on your form doesn’t match what actually happened, you correct the record on your return, usually through Form 5329.

Form 8606: After-Tax Basis, Roth Conversions, and Nonqualified Roth Withdrawals

If you ever made nondeductible contributions to a traditional IRA, you have what the tax code calls basis in the account.³ Form 8606 tells the IRS about that basis so you don’t pay tax on money that was already taxed. Filing it isn’t optional. Skipping the form carries a $50 penalty per failure, and worse, the IRS will treat every dollar you withdraw as fully taxable.⁴

You don’t get to pick which dollars come out. Federal law treats all your traditional, SEP, and SIMPLE IRAs as a single pool, and every distribution contains a proportionate mix of pre-tax and after-tax money.³ Part I of Form 8606 walks through the pro-rata math: total after-tax contributions divided by the combined year-end value of all your traditional IRAs plus distributions taken during the year. That fraction determines how much of the withdrawal is tax-free. With $20,000 of basis and a combined balance of $200,000, only 10% of any distribution escapes tax.

Part II handles Roth conversions using the same pro-rata logic. The basis portion converts tax-free; the pre-tax portion adds to your income. The custodian reports the conversion on Form 1099-R, but Form 8606 decides how much of it is actually taxable.

Part III covers nonqualified Roth IRA withdrawals. A qualified Roth distribution requires that the account has been open at least five years and that you’re 59½ or older, disabled, or the funds are paid after death. If the withdrawal doesn’t meet those conditions, Part III determines how much is taxable or subject to the early-withdrawal penalty.⁵ Qualified Roth distributions don’t require Form 8606 at all.

Form 5329: Early-Withdrawal Penalty and Missed RMDs

Form 5329 handles two penalties that catch people off guard, and it’s also how you claim exceptions to them.

The 10% Early-Distribution Penalty

Withdrawals from a traditional IRA before age 59½ generally face a 10% additional tax on the taxable portion, on top of ordinary income tax.⁶ You report it on Part I of Form 5329. If your 1099-R already shows code 1 in Box 7 and no exception applies, you may not need a separate Form 5329, since the penalty flows through Schedule 2. But if you qualify for an exception, Form 5329 is required to claim it.

The IRS recognizes a long list of exceptions, and SECURE 2.0 added several more starting in 2024:⁷

Substantially equal periodic payments over your life expectancy, sometimes called 72(t) payments. Once started, they must continue for at least five years or until age 59½, whichever is later.
Total and permanent disability, certified by a physician.
Unreimbursed medical expenses above 7.5% of adjusted gross income.
Up to $10,000 lifetime for a first-time home purchase.⁶
Qualified higher education expenses.
Health insurance premiums after at least 12 consecutive weeks of unemployment compensation.
Emergency personal expenses, one per year, up to the lesser of $1,000 or your vested balance over $1,000.
Domestic abuse victim distributions, up to the lesser of $10,000 (indexed) or 50% of the account.
Federally declared disaster distributions, up to $22,000.

Each exception has its own code, entered on Line 2 of Form 5329. Getting the right code matters. If your 1099-R shows code 1 but your withdrawal actually fit an exception, the correct code on Form 5329 is what removes the penalty.⁸

The 25% Penalty for a Missed RMD

If you were required to take a minimum distribution and fell short, the penalty is 25% of the shortfall, reported on Part IX of Form 5329. Before SECURE 2.0 the rate was 50%. If you take the missed distribution and file a return reflecting the penalty within the correction window, the rate drops to 10%. That window runs from the date the penalty is imposed until the earlier of the IRS assessing the tax, mailing a deficiency notice, or the end of the second tax year after the shortfall.⁹

If the shortfall was a genuine mistake, you can request a full waiver. Attach a letter explaining the reasonable cause, write “RC” and the amount you want waived on the dotted line next to the penalty line, and subtract the waived amount before calculating the tax. The IRS reviews the explanation and notifies you only if the waiver is denied.¹⁰ Waivers are commonly granted when you’ve already taken the missed amount and can show the oversight was honest.

Form 5498: You Don’t File It, but You’ll Need a Number From It

Your custodian also sends Form 5498, which reports contributions, rollovers, and the fair market value of the account at year-end. Box 5, the December 31 balance, is what you need for two calculations: the pro-rata fraction on Form 8606, and your required minimum distribution. Form 5498 typically arrives in late May, after the filing deadline, so most people pull the December 31 figure straight from their account statement when preparing a return.

How the Numbers Reach Form 1040

Everything from Forms 8606 and 5329 lands on your main return. IRA distributions go on lines 4a and 4b of Form 1040. Line 4a shows the gross distribution from Box 1 of the 1099-R. Line 4b shows the taxable portion after accounting for basis, rollovers, or qualified charitable distributions. If the whole distribution was taxable, you can skip 4a and enter the amount on 4b only.¹¹ Any penalty from Form 5329 adds to your total tax through Schedule 2.

One situation people overlook: if your income is low enough that you don’t otherwise need to file a return, but you owe a penalty on Form 5329, you must file Form 5329 by itself. A standalone Form 5329 can’t be e-filed and needs your signature and mailing address.¹⁰ The same applies for a prior year in which you missed an RMD but didn’t file a return then.

Situations That Change the Reporting

Rollovers

A direct rollover, sometimes called a trustee-to-trustee transfer, moves money straight from one retirement account to another. The custodian reports it on Form 1099-R with code G in Box 7 and $0 in Box 2a.² No withholding, no time pressure, no annual limit.

An indirect rollover means the custodian sends the money to you and you have 60 days to deposit it into another eligible retirement account. Miss the deadline and the full amount becomes a taxable distribution, potentially with an early-withdrawal penalty added.¹² The IRS may waive the 60-day rule in limited circumstances beyond your control, but that’s not something to plan on.

Two other traps come with indirect rollovers. Your custodian withholds 10% for federal taxes on IRA distributions (20% from employer plans like 401(k)s) unless you opt out, so rolling over the full amount means making up the withheld portion from other funds within 60 days. And you’re limited to one indirect IRA-to-IRA rollover in any 12-month period across all your IRAs combined. Direct transfers don’t count toward that limit.¹²

Inherited IRAs

Distributions from an inherited IRA show up on Form 1099-R with code 4 in Box 7, indicating a death-related distribution.² If the original owner had after-tax basis, you’ll need Form 8606 to calculate the nontaxable portion. The 10% early-withdrawal penalty does not apply to inherited IRA distributions regardless of the beneficiary’s age.

How quickly you must empty the account depends on your relationship to the deceased and when they died. For deaths in 2020 or later, most non-spouse beneficiaries must withdraw everything within 10 years. Surviving spouses, minor children of the account owner, disabled or chronically ill individuals, and beneficiaries no more than 10 years younger than the deceased can stretch distributions over their own life expectancy.¹³ Older rules apply for deaths before 2020.

Qualified Charitable Distributions

If you’re at least 70½, you can transfer up to $111,000 per year directly from your traditional IRA to a qualifying charity. Qualified charitable distributions count toward your RMD but don’t get added to taxable income.¹⁴ The reporting wrinkle: your 1099-R won’t distinguish a QCD from any other distribution. The custodian reports the full amount in Box 1, and it’s on you to separate the charitable portion. Enter the total on line 4a of Form 1040, report only the non-QCD portion on line 4b (or $0 if the whole distribution was a QCD), and check box 2 on line 4c.¹⁵ Don’t also claim a charitable deduction on Schedule A for the same amount.

State tax treatment of IRA distributions varies. Some states have no income tax; others partially or fully exempt retirement income. Check your state’s rules before assuming the federal picture is the whole picture.

1
Office of the Law Revision Counsel. 26 USC 6047 – Information Relating to Certain Trusts and Annuity Plans
2
Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498
3
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
4
Office of the Law Revision Counsel. 26 USC 6693 – Failure to Provide Reports on Certain Tax-Favored Accounts or Annuities
5
Internal Revenue Service. Instructions for Form 8606 – Nondeductible IRAs
6
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
7
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
8
Internal Revenue Service. Instructions for Form 5329
9
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
10
Internal Revenue Service. Instructions for Form 5329
11
Internal Revenue Service. Instructions for Form 1040 (2025)
12
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
13
Internal Revenue Service. Retirement Topics – Beneficiary
14
Congressional Research Service. Qualified Charitable Distributions From Individual Retirement Accounts
15
Internal Revenue Service. Instructions for Form 1040 (2025)