“International Paper employees can benefit from understanding how changes to workplace retirement plan rules may affect tax reporting and long-term retirement planning, and Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement Group, encourages reviewing these decisions with qualified professionals so they align with your overall financial goals and consulting a tax advisor for individualized tax guidance.” – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'International Paper employees should take time to understand how changes to employer retirement plan contribution options may influence future financial planning and tax reporting, and Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group, encourages reviewing these workplace benefit decisions as part of a broader retirement strategy while consulting a tax advisor for individualized tax guidance.” – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article we will discuss:

1. Why some retirement plan participants may receive IRS Form 1099-R even without taking a retirement account distribution.

2. How the SECURE 2.0 Act changed the rules for Roth employer matching and nonelective contributions.

3. Important tax reporting, timing, and planning considerations when electing Roth treatment for employer contributions.

IRS Form 1099-R is likely recognizable to many International Paper employees if they have taken distributions from a tax-deferred retirement account. Form 1099-R is commonly used to report funds distributed from retirement accounts rather than contributions made to them. However, because of changes made by the SECURE 2.0 Act, certain retirement plan participants may receive a Form 1099-R even if they have not withdrawn money from their retirement account.

The SECURE 2.0 Act Changes the Rules

Before the SECURE 2.0 Act, employer matching and nonelective contributions could not be made directly as Roth contributions to a governmental Roth 457(b), Roth 401(k), or Roth 403(b) plan. Instead, those employer contributions were deposited into the traditional (pretax) portion of the retirement plan. In many cases, participants who wanted Roth treatment had to complete an in-plan Roth rollover if their retirement plan allowed it.

Similarly, under previous law, employer contributions made to SIMPLE and SEP IRAs were not eligible for Roth treatment.

The SECURE 2.0 Act changed these rules. Employers now have the option to allow employees to elect to receive fully vested matching and nonelective employer contributions as Roth contributions under a qualified retirement plan or to a Roth SEP or Roth SIMPLE IRA. This option is only available if the employer chooses to offer it and the employee elects Roth treatment.

Why You May Receive Form 1099-R

The IRS treats designated Roth employer contributions under eligible retirement plans as in-plan Roth rollovers for tax reporting purposes. Likewise, employer contributions made to Roth SEP and Roth SIMPLE IRAs are treated as though they were first contributed to a traditional IRA and then immediately converted to a Roth IRA.

Although no money has actually been withdrawn from the retirement account, the IRS requires these Roth employer contributions to be reported on Form 1099-R because of this reporting method.

How Form 1099-R Reporting Works

Employer Roth matching and nonelective contributions for eligible retirement plans, including 401(k), 403(b), and governmental 457(b) plans, are generally reported on Form 1099-R for the year the contributions are credited to the participant's account. In most cases, the form reports:

Box 1: Gross Distribution (the amount credited)

Box 2a: Taxable Amount (generally the same amount)

Box 7: Distribution Code G, indicating a direct rollover

For employer contributions made directly to a Roth SEP IRA or Roth SIMPLE IRA, Form 1099-R generally reports:

Box 1: Gross Distribution

Box 2a: Taxable Amount

Box 7: Code 2 if the IRA owner is under age 59½, or Code 7 if age 59½ or older. Code 2 indicates that the 10% early distribution tax does not apply.

The IRA/SEP/SIMPLE checkbox is also marked on the form.

If you decide not to elect Roth treatment, employer matching and nonelective contributions generally continue to be made to the traditional portion of your retirement plan.

When the Income Becomes Taxable

Timing can be an important planning consideration.

Employers often have until the due date of their tax return, including any approved extensions, to make certain employer contributions. As a result, employer contributions associated with one tax year may not be deposited until the following calendar year.

Because of this timing, Form 1099-R is issued for the year in which the employer contribution is actually credited to your retirement account rather than the year to which the contribution relates.

For example, an employer contribution attributable to 2025 but credited to your account during 2026 may be reported as taxable income in 2026.

Planning Considerations

This timing difference may affect your tax planning.

Depending on your financial situation, you and your tax professional may determine that recognizing Roth income in one year is preferable to another. However, if the employer contribution is not credited until the following year, that is generally when the taxable income will be recognized.

Before electing Roth treatment for employer contributions, it is important to discuss your individual circumstances with your tax advisor because the election is generally irrevocable.

Many of the considerations involved in choosing Roth treatment for employer contributions are similar to deciding:

- Whether to contribute to a Traditional IRA or a Roth IRA.

- Whether to contribute to a Traditional 401(k) or Roth 401(k).

- Whether completing a Roth conversion makes sense.

If you elect Roth treatment, the employer contribution is generally reported to the IRS on Form 1099-R and included in your taxable income for the year it is credited to your Roth account.

If you instead elect to have employer contributions deposited into the traditional portion of your retirement plan, the amount is generally not included in your taxable income until it is distributed or converted.

What Should You Do If You Receive Form 1099-R?

If you receive a Form 1099-R reporting an employer Roth contribution, provide a copy to your tax preparer and let them know it reflects an employer Roth contribution. If you believe the form contains incorrect information, contact the issuer promptly and request a corrected Form 1099-R.

Retirement Planning Support

Understanding how changes to retirement plan rules may affect your taxes and long-term retirement strategy can be challenging, especially when evaluating workplace retirement benefits. The Retirement Group can help you better understand how these changes may relate to your overall retirement planning strategy. If you have questions about your retirement benefits or would like to discuss your retirement planning options, call The Retirement Group at (800) 900-5867 to speak with a financial professional.

Sources:

1. Calloway, Matthew, Brian J. Kearney, and Margaret Berger.  IRS Guidance Illuminates SECURE 2.0's Roth Employer Contributions . Mercer, 2 Feb. 2024,  https://www.mercer.com/en-us/insights/law-and-policy/irs-guidance-illuminates-secure-2-0-s-roth-employer-contribution/ . Accessed 29 June 2026.

2. Grant Thornton LLP.  IRS Highlights SECURE 2.0 Impact on Forms W-2 and 1099-R . Grant Thornton, 17 Sept. 2024,  https://www.grantthornton.com/insights/newsletters/tax/2024/hot-topics/sep-17/irs-highlights-secure-impact-on-forms-and-1099r/ . Accessed 29 June 2026.

3. Internal Revenue Service.  Notice 2024-2: Miscellaneous Changes Under the SECURE 2.0 Act of 2022 .  Internal Revenue Bulletin , no. 2024-02, 8 Jan. 2024,  https://www.irs.gov/irb/2024-02_IRB . Accessed 29 June 2026.

4. Internal Revenue Service.  SECURE 2.0 Act Impacts How Businesses Complete Forms W-2 . Fact Sheet FS-2024-29, Aug. 2024,  https://www.irs.gov/newsroom/secure-2-point-0-act-impacts-how-businesses-complete-forms-w-2 . Accessed 29 June 2026.

5. Sell, Lisette.  How SECURE 2.0 Options Impact Form W-2 and Form 1099-R Reporting . Davis Wright Tremaine LLP, 13 May 2024,  https://www.dwt.com/blogs/employment-labor-and-benefits/2024/05/how-secure-2-0-impacts-w-2-1099-r-reporting . Accessed 29 June 2026.