Announcements

January 20, 2026

IRS introduces changes to tax reporting on 1099 forms

Effective for tax year 2025, the Internal Revenue Service (IRS) is making changes to how certain retirement and education account distributions are reported.

These changes affect:

Form 1099-R

  • For qualified charitable distributions (QCDs)
     

If your clients who are at least age 70½ donate directly from their IRA to a qualified charity that meets the IRS QCD requirements, their Form 1099-R will include a new distribution code to make it easier for your clients and their tax preparer when completing their income taxes.

The IRS has introduced code Y to indicate a QCD. This new code will be combined with either existing code 7 for a normal distribution or existing code 4 for a beneficiary distribution, when applicable.

While this code is now in effect, the IRS has announced that use of code Y is optional for 2025. Capital Group will report QCDs, as required, beginning with the 2026 IRS Form 1099-R. Until the changes take effect, any QCDs will be classified as age-based distributions (early or normal) and will be subsequently corrected to reflect the appropriate distribution type on the 2026 1099-R.

For example:

o   Combined code Y7 will be used for normal distribution QCDs
o   Combined code Y4 will be used for inherited IRA–related QCDs

To request a QCD, clients must submit the IRA Qualified Charitable Distribution Request, which includes the required certification language and must be signature guaranteed. A letter of instruction cannot be accepted. 
 
  • For Roth SIMPLE IRA early distributions
     
If your client is under age 59½ and takes money out of their Roth SIMPLE IRA within 2 years of starting contributions, their Form 1099-R will now show the new code JS.
Form 1099-Q will include an updated box 4 to indicate 529 transfers or rollovers to Roth IRAs. 
 

The IRS has implemented these changes to make tax reporting clearer and reduce filing errors. For additional details, visit IRS.gov/Form1099-R and IRS.gov/Form1099-Q.

For financial professionals only. Not for use with the public.
This material does not constitute legal or tax advice. Investors should consult with their legal or tax advisors.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Use of this website is intended for U.S. residents only. Use of this website and materials is also subject to approval by your home office.