IRS Issues Updated Instructions for Forms 1099-R and 5498

The IRS has updated, for 2016, “Instructions for Forms 1099-R and 5498: Text of 2016 IRS Instructions for Forms 1099-R and 5498: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc., and IRA Contribution Information.”

The instructions outline the following as changes that affect 2016 reporting.

• FATCA filing requirement check box. A new check box was added to Form 1099-R to identify a foreign financial institution or a U.S. payer filing the form to satisfy its chapter 4 reporting requirement.

• New early distribution exceptions. Public Laws 114-26 and 114-113 added federal law enforcement officers, federal customs and border protection officers, federal firefighters, air traffic controllers, nuclear materials couriers, members of the U.S. Capitol Police or Supreme Court Police, and diplomatic security special agents of the Department of State to the definition of qualified public safety employees under Internal Revenue Code Section 72(t)(10(B)) eligible for an early distribution exception for distributions made after separation from service in or after the year the employee has reached age 50. These changes are effective for distributions made after Dec. 31, 2015.

• Extension of tax-free distributions from IRAs for charitable purposes. Public Law 114-113 permanently extends tax-free distributions from IRAs for charitable purposes, for distributions made in tax year 2015 and later.

Form 1099-R is used for reporting on distributions from pensions, annuities, retirement or profit-sharing plans, IRAs and Insurance Contracts, and Form 5498 is used to provide information on IRA contributions.