This article was updated for Tax Year 2023, last edited on December 21st, 2023.
According to the IRS, all or some portion of the amounts you receive may be taxable unless the payment is a qualified distribution from a designated Roth account. The simplest way to check on what portion is taxable is through your 1099-R. You’ll receive this every year that you take a distribution.
Box 2a shows the taxable amount of your distribution.
Box 2b
If the total distribution box is checked, you may qualify for special elections that may lower your tax.
If the taxable amount is not determined box is checked, this means the payer doesn’t know how much is taxable.
Box 7 shows the specific type of distribution you received and whether you need to pay a 10% penalty on early distribution.
Additional Resources:
IRS Resource: Topic No. 451 Individual Retirement Arrangements (IRAs)
IRS Resource: SEP and SIMPLE IRA Plans
This content is provided for informational purposes only and should not be construed as tax, legal, financial, accounting, or other advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need advice specific to you.
Any third-party links are provided for informational purposes only. The third parties and their sites are not endorsed by April and April is not responsible for, and has no control over, their content, privacy policies, or terms of service.