For a final distribution from a trust account, you should report the entire taxable amount from Box 2a of Form 1099-R in the "Distribution to Beneficiaries." The federal income tax withheld (Box 4) does not reduce the distribution amount; it is simply the tax already paid on behalf of the beneficiaries.
Box 2a on Form 1099-R indicates the taxable amount of the distribution. This is the portion of the distribution that is subject to federal income tax.
Box 4 on Form 1099-R shows the federal income tax withheld from the distribution. This amount has already been paid to the IRS on behalf of the recipient.
