Understanding Your 1099-R Tax Form
Internal Revenue Service tax form 1099-R will be distributed to all Maryland State Retirement and Pension System payees by the end of January 2015. The forms provide each payee with detailed information on his or her pension income for the previous year.
Most payees receive only one 1099-R tax form each year. However, persons who retired in 2014 will receive a separate 1099-R tax form for any additional refunds they received, such as a refund of voluntary annuity contributions.
Additionally, retirees who turned age 59½ in calendar year 2014 will receive two 1099-R forms. These retirees will receive a 1099-R form for annuity payments distributed in the calendar year prior to reaching age 59½ with a distribution code 2. They also will receive a separate 1099-R form for annuity payments distributed in the calendar year on or after they reached age 59½ with a distribution code 7.
The following key describes some of the most important components of your 1099-R tax form.
BLOCK 1: (Gross Distribution)
This is the total amount of pension benefits paid to you by the Maryland State Retirement Agency during the 2014 calendar year.
BLOCK 2A: (Taxable Amount)
This is the taxable amount of your pension benefit. Depending on your retirement date, retirement type and whether you contributed to your plan, you may not be taxed on the total amount of benefits paid to you. If this is the case, the amount shown in this block will differ from the amount in Block 1.
BLOCK 4: (Federal Income Tax Withheld)
This block shows any federal income tax deducted from your monthly retirement payments. To change the amount of federal income tax being withheld, complete a tax withholding request form (Form 766). To access a printable version of the form click here.
BLOCK 5: (Employee Contributions)
This is the amount of your contributions that were recovered, tax free, during 2014. The dollar figure in this box does NOT represent the amount of any health insurance premiums withheld from your pension benefit.
BLOCK 7: (Distribution Code(s))
IRS distribution codes are explained on the back of the 1099-R form.
BLOCK 9B: (Total Employee Contributions)
For retirees who received their first pension benefit in 2014, this block contains the value of any contributions made during employment that can be recovered tax-free. Only members who retired in 2014 and made pension contributions will see a value in this block. For members who retired prior to 2014, a zero will be printed in the block.
BLOCK 12: (State Income Tax Withheld)
Any Maryland State income tax deducted from your monthly benefit is shown in this block. To change the amount of Maryland state income tax being withheld, complete a tax withholding request form (Form 766). To access a printable version of the form
BLOCK 17: (Pick-Up Contributions)
This figure applies to members whose employers participated in the State Pick-up Program. For an explanation of pick-up contributions, see “State Retirement Pick-up and your taxes” on page 4 of the January 2015 Retiree News & Notes newsletter.
Important: Change to Block 17 (Pick-Up Contributions) for calendar year 2014
Retirees receiving a 1099-R form based on a disability retirement that commenced before January 1, 1995, will notice a change in Block 17. On prior 1099-R forms, the original amount of the retiree’s state pick-up contributions has been reported in Block 17. Beginning with the 1099-R form for 2014, “EP USED” will be reported in Block 17 for these retirees. This new reporting is based on the assumption that retirees, by this time, have recovered their pick-up contributions.