1099-R Lump Sum Distribution

[MsMaddie0292]

I starting receiving a distribution from a pension I did not know I had in 2022.  The financial company managed to track me down and informed me that it existed.  Required distributions apparently started in 2020 and they have been trying to find me since then.  Actual distributions to me started in October 2022 with a lump-sum payment, and I have since been receiving regular monthly payments.

I was expecting my 2022 1099-R to include the lump-sum payment and the monthly payments for 2022.  Instead, the financial company issued 3 1099-R forms, one for 2020, one for 2021, and then the third for 2022.  I did not receive any money from this pension until October 2022, so shouldn't all of it be declared as 2022 income or do I have to amend the previous years (2020 and 2021) tax returns to show the pension income even though I did not actually receive any pension income in those years?

As far as I can tell this strange scenario is not covered in TurboTax.  I can correctly enter in my 2022 1099-R form as expected, but I do not see a way to report the 2020 and 2021 1099-R forms since this is income I received in 10/2022.  I know TurboTax will correctly ask about Social Security lump-sum payments, but it did not ask about pension lump-sum payments.

[ThomasM125]

Since the 1099-R forms are dated in different years, the IRS will assume you received that income in the years listed on the forms. So, the easiest way to handle the situation would be  to amend the return for those years and report the income as listed on the form. Also, there would be penalties involved for not reporting the required minumum distributions in the years they were reported. Whether that is correct tax treatment is debatible.

Your other option is to enter a substitute 1099-R form in the current tax reporting year and enter the income reported in prior years in the current year. If you do that, you will probably get an assessment of tax from the IRS for the distributions reported in prior years and you will have to wrestle with them about it.

Follow these steps to enter a substitute form 1099-R in TurboTax:

  Choose the Federal option on your left menu bar

1. Choose Wages & Income
2. Choose the Retirement Plans and Social Security menu option 
3. Choose IRA, 401(k), Pension Plan Withdrawals(1099-R)
4. Choose the enter 1099-R option
5. Choose Change how I enter my form
6. Choose Type it in myself
7. Choose Financial institution or other provider (1099-R)
8. Enter in as much information as you can regarding the pension income 
9. Work through that section until you see Do any of these situations apply to you?
10. Choose I need to file a substitute 1099-R
11. Complete the information requested