1099-R Box 5 Guidance
Each January MFPRSI sends 1099-R forms to its members and beneficiaries receiving taxable benefits. This form is used to report distributions from MFPRSI and it displays several pieces of useful information for reporting personal annual taxes to the IRS and state government.
The 1099-R form may include an amount in Box 5. The heading of Box 5 states, “Employee contributions/Designated Roth contrib. or insurance premiums.” For MFPRSI purposes, however, Box 5 represents the member’s/beneficiary’s after-tax contributions recovered tax free for the year.
If you receive a 1099-R form from MFPRSI with an amount listed in Box 5, this represents 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 purposes 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.
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 passes away prior to full recovery, the remaining balance is transferred to the member’s beneficiary.