Tag Archives: Understanding Box 9B on Form 1099-R

Understanding Box 9B on Form 1099-R

When a taxpayer retires, they will start to receive money from their retirement plan (e.g. pension or annuity).  As the payments are made to you, each payment will consist of two parts.  One portion will be the amount (if any) that you contributed to the plan and the second portion will be the piece the employer contributed (or the earnings).

You are not required to enter the total employee contributions or designated Roth contributions that are reported in box 9b. However, failing to do so may cause you to pay more tax than you should.

What does an amount in box 9b mean?

The amount shown is the total amount of after-tax contributions you paid to your retirement plan while working.  It’s used to determine the after-tax contribution amount shown in Box 5.  If you want to know what each field on Form 1099-R means, then check out this informative illustration.

Do you pay tax on this amount?

If you made post-tax contributions to your retirement account, you don’t pay income taxes on the portion of the distributions you receive based upon the amount for which you were already taxed.  This is referred to as your “basis” in  the plan.  If the taxpayer didn’t make any after-tax contributions to the retirement plan (which is often the case), then the “basis” is zero, and each distribution from the retirement plan is 100% taxable.

So what do you do with this amount?

If you are using software, then you want  to include it somewhere to indicate your basis.  If you are doing your taxes manually, then there is an IRS Simplified Method Worksheet that determines the amount of basis that is included in each periodic payment.  This worksheet will help you  determine how much basis the taxpayer should spread out over the payments they receive.  If you are using a professional, they should  know what to do!