The 5 Most Costly 1099-R Mistakes Retirees Make Before Filing (And How to Catch Them Early)

A single incorrect box on a 1099-R can quietly change your tax result, delay your return, or create unnecessary follow-up after you file.

The good news is that most 1099-R issues are easy to identify when you know where to look.

Below are five of the most common 1099-R problems we see each filing season — along with a simple way to review your own forms before your return is finalized.

Mistake #1 – A rollover is reported as taxable

What happens
You moved money from one retirement account to another, but the 1099-R shows a taxable distribution because the coding or taxable amount is incorrect.

Why it matters
You could end up paying tax on money that never actually left the retirement system.

How to catch it

• Review the Box 7 distribution code and the taxable amount.

• Compare what appears on the form to what actually occurred (trustee-to-trustee rollover, 60-day rollover, etc.).

Self-audit tip
Compare your custodian’s rollover confirmation to your 1099-R.
If the taxable amount is not zero or the code does not align with a rollover, flag it for review.

Mistake #2 – A Qualified Charitable Distribution (QCD) is not reflected properly

What happens
You made a Qualified Charitable Distribution from your IRA, but the 1099-R does not clearly reflect the transaction.

Why it matters
If a QCD is not reported correctly on your return, your adjusted gross income may appear higher than it should — which can affect taxes and Medicare premiums.

How to catch it

• Gather your charity acknowledgment letters (date, amount, and organization).

• Confirm the distribution amount and timing with your custodian records.

Self-audit tip
A 1099-R does not specifically label a QCD. Proper reporting depends on documentation and how the return is prepared. Make sure your QCD paperwork is ready before filing.

Mistake #3 – After-tax basis is not reconciled (Form 8606)

What happens
You have after-tax money in an IRA, but that basis is not properly accounted for when reporting a distribution or Roth conversion.

Why it matters
You can end up paying tax again on money that has already been taxed.

How to catch it

• Locate any prior Form 8606 filings.

• Gather records of nondeductible IRA contributions.

Self-audit tip
If you have ever made nondeductible IRA contributions or completed backdoor Roth conversions, Form 8606 plays an important role in your tax reporting. Make sure it is included this year.

Mistake #4 – Withholding does not match your records

What happens
The federal or state withholding reported on the 1099-R does not match what was actually withheld during the year.

Why it matters
Incorrect withholding totals can contribute to underpayment penalties or unexpected balances due.

How to catch it

• Add up withholding from all distribution confirmations or year-end statements.

• Compare those totals to Box 4 (federal withholding) and Box 12 (state withholding) on the 1099-R.

Self-audit tip
If you took multiple distributions, small discrepancies can add up. Reconciling now helps prevent surprises later.

Mistake #5 – A Roth conversion is not clearly coded

What happens
A traditional-to-Roth conversion was completed, but the 1099-R does not clearly reflect the conversion through its coding or taxable amount.

Why it matters
Unclear reporting can create processing delays and unnecessary follow-up.

How to catch it

• Confirm your conversion amount and date using your custodian confirmations.

• Review the 1099-R coding and taxable amount for consistency.

Self-audit tip
If withholding was taken from the conversion, that amount is also taxable and should be reflected in your overall tax picture.

A 10-Minute 1099-R Self-Audit

Before your return is filed, take a few minutes to walk through this checklist:

Gather

• All 1099-R forms

• Custodian confirmations

• QCD acknowledgment letters

• Prior Form 8606 (if applicable)

Verify

• Box 7 codes align with what actually occurred

Compare

• Taxable amounts to the true nature of each transaction (rollover, QCD, basis, conversion)

Reconcile

• Total withholding to Boxes 4 and 12

Flag

• Any mismatch, uncertainty, or documentation gaps

Get personal help before you file

If you flagged even one item while reviewing your 1099-R forms, it may be worth a quick review before your return is finalized.

In a 30-minute Pre-Filing Review, we will:

• triage the items you flagged

• coordinate with your tax professional as needed

• provide a clear, step-by-step filing checklist