What to Know About Form 1099-R for the 2025 Tax Year

If you received a Form 1099-R or expect one, you’re not alone. Millions of retirees, near-retirees, and beneficiaries receive this form every year, and it remains one of the most commonly misunderstood tax documents. Understanding the Form 1099-R 2025 tax updates can help you avoid costly reporting mistakes.

Today, we want to walk through what Form 1099-R tells you, what it does not tell you, and what’s new for the 2025 tax year.

What Form 1099-R Reports and Why It Matters

Form 1099-R reports distributions from retirement accounts, including IRAs, 401(k)s, 403(b)s, pensions, and annuities. If money left one of those accounts during the year, you will generally receive a 1099-R.

The key point is this: the amount shown on the form is the gross distribution, not necessarily the amount you owe tax on.

That distinction is where many costly mistakes happen.

Common Form 1099-R Reporting Mistakes

We continue to see the same core errors year after year.

Some people fail to report a distribution at all, often because it’s their first year in retirement. Others report the full amount as taxable income even when part or all of it should be excluded.

That includes rollovers from employer plans to IRAs, distributions that include after-tax basis, and Qualified Charitable Distributions (QCDs).

The form itself does not always do that thinking for you.

What’s New on the 2025 Form 1099-R

For the 2025 tax year, forms issued in early 2026 include a few notable updates that retirees should understand.

First, the IRS has introduced Code Y to identify Qualified Charitable Distributions from IRAs. This is an important change.

In the past, QCDs were typically reported using standard distribution codes, which made it harder to distinguish charitable transfers from taxable withdrawals. Code Y is designed to flag QCDs more clearly, often in combination with other codes, such as normal distributions or beneficiary distributions.

Second, it’s important to note that use of Code Y is optional for the 2025 reporting year. That means some custodians will use it and others may not. Taxpayers should not assume that the absence of Code Y means a distribution was taxable.

Third, the form itself has been redesigned to be more concise, with several copies combined to reduce the total number of pages.

And finally, as usual, most 1099-Rs are mailed or made available online by January 31.

What the New Code Does and Does Not Do

Code Y is a step in the right direction, but it does not eliminate the need for review.

Even with the new code, you are still responsible for confirming that a distribution qualifies as a QCD and is reported correctly on your tax return. The form may help signal intent, but it does not replace proper tax reporting.

The same is true for rollovers and after-tax IRA basis. Those amounts may appear on the 1099-R, but the form alone does not determine what is taxable.

Why This Matters More Than Ever

With changes from the SECURE Act and SECURE 2.0, many retirees now receive multiple Form 1099-Rs in a single year. One for a required distribution, another for a Roth conversion, and possibly another for an inherited account.

That increases the odds of misreporting, especially when the full distribution amount is mistaken for taxable income.

Final Advice on Form 1099-R

Form 1099-R is an information form. It is not a verdict.

Whether you prepare your own return or work with a tax professional, you still need to understand what the distribution was, why it occurred, and how it should be treated under current tax rules.

If something doesn’t look right, ask questions before you file. Fixing a mistake after the fact is almost always harder than getting it right the first time.