Announcements

January 7, 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 to a charity from their IRA (make a QCD), their Form 1099-R may include a new distribution code to make it easier for your clients, their tax preparer and the IRS to confirm that the distribution was sent to a qualifying charitable organization.

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 implement the QCD reporting changes in tax year 2026. 

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

  • 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.

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