1099-R Box 5 Guidance
Every year in January MFPRSI sends 1099-R forms to its members receiving taxable benefits. This form is used to report distributions from MFPRSI, a retirement plan, to its members. The form will display several pieces of information that are useful (e.g., gross amount paid by the retirement plan, taxable amount distributed by the retirement plan, federal and state taxes withheld, etc.) for reporting personal annual taxes to the IRS and state government.
Each individual receiving a taxable benefit from MFPRSI receives an annual 1099-R form with this information. For those individuals that MFPRSI can determine the taxable amount, the 1099-R form will include an amount in Box 5. The heading of Box 5 states, "Employee contributions/Designated Roth contrib. or insurance premiums." For MFPRSI purposes, Box 5 represents the member's investment in the retirement system (after-tax contributions) recovered tax free for the year.
The amount reported in Box 5 was determined using the Simplified Method as outlined in IRS publication 575. The simplified method typically spreads the recovery of the member's investment over a 20-to-30-year period. If the member dies prior to full recovery, the remaining balance is passed to the member's beneficiary.
Further stated, Box 5 is the amount of non-taxable pension you received in the calendar year due to previously paying tax on a portion of your pension contributions while you were employed. Box 5 is provided for informational purpose only and is already reflected in the Federal (Box 2a) and State (Box 14) Taxable Amount figures - no additional steps need to be taken in regard to your personal tax return.