Table of Contents
Introduction
The “Schedule of Participant Benefit Payments for Calendar Year 2024” worksheet must be completed to report benefits paid to terminated participants, life insurance subject to PS 58 costs, and participant loans that were defaulted during 2024. The worksheet will be used to generate the required IRS Forms 1099-R, 1096, and 945, if applicable. Please note that IRS Form 1099-R must be provided to participants no later than January 31, 2025. Therefore, we require that you complete this worksheet and return it to us no later than Tuesday, January 19, 2025 via fax: (305) 274-1882 or e-mail: ps@pensionnetwork.net.
In order to complete the “Schedule of Participant Benefit Payments for Calendar Year 2024” worksheet, please follow these instructions carefully:
Column (1):
Type the participant’s name and Social Security Number as it appears on their Social Security card.
Type the participant’s complete mailing address.
Column (2):
There are two primary ways a benefit payment is reported:
- Non-taxable
- Taxable
Typically, a non-taxable amount is paid with one check, and a taxable amount is paid with two checks (tax withholding to IRS and payment to participant). P.S. 58 costs and defaulted loans are reported as a single amount taxable to the participant with no withholding tax.
Columns (3), (4), and (5):
If Participant elected a Rollover:
- Type the amount paid directly to the IRA or qualified plan next to “TO ROLLOVER” in column (3).
- Type the date of the check or wire on the corresponding row in column (4).
- Type the check number or wire tracking number on the corresponding row in column (5).
If Participant elected a Lump Sum:
- Type the amount paid directly to the participant next to “TO PARTICIPANT” in column (3).
- Type the date of the check or wire on the corresponding row in column (4).
- Type the check number or wire tracking number on the corresponding row in column (5).
- Type the amount paid directly to IRS for taxes withheld next to “TO IRS FOR TAX W/H” in column (3).
- If the participant received a required minimum distribution, this may be zero if no tax was withheld.
- Type the date of the check or wire on the corresponding row in column (4).
- Type the check number or wire tracking number on the corresponding row in column (5).
If Participant had life insurance with reportable P.S. 58 costs:
- Type the amount provided by insurance agent next to “TO PARTICIPANT” in column (3).
- Type N/A on the corresponding row in column (4).
- Type N/A on the corresponding row in column (5).
If Participant had a loan defaulted during the year:
- Type the amount of the outstanding balance as of the default date—including interest—next to “TO PARTICIPANT” in column (3).
- Type the date the loan was defaulted on the corresponding row in column (4).
- Type N/A on the corresponding row in column (5).
Column (6):
Type the corresponding distribution code. The code must consist of at least one number. A letter code may also be added, if applicable. The codes are as follows:
| Code | Description |
|---|---|
| 1 | Early distribution before age 59½ if code 2 does not apply. |
| 2 | Early distribution before age 59½; however, either (a) participant was at least age 55 and terminated employment, or (b) distribution is part of a series of substantially equal installment payments. |
| 3 | Legal Disability. |
| 4 | Death. |
| 7 | Normal distribution. Use this code if the participant is over age 59½ and the distribution is not rolled over. |
| 8 | Refund of excess deferrals or contributions. |
| 9 | Cost of current life insurance protection (PS 58 costs). |
| G | Direct rollover to a qualified plan, a tax-sheltered annuity, a governmental 457(b) plan, or an IRA. |
| L | Loans treated as distributions. |
Examples:
Example #1: Joe, age 40, receives a hardship distribution. The code entered for Joe is 1.
Example #2: Sally, age 57, terminates and receives a distribution of 100% of her account. The code entered for Sally is 2.
Example #3: Bob, age 65, retires and receives a distribution of 100% of his account. Bob rolls this distribution over to an IRA. The code entered for Bob is G.
Example #4: Tina, age 68, retires and receives a distribution of 100% of her account. Tina does not roll this distribution over. The code entered for Tina is 7.
Example #5: Tom, age 32, defaulted on his plan loan. The code entered for Tom is 1L.
Example #6: Gina, age 42, received a refund of deferrals and earnings as a result of the plan’s failing the ADP test. The code entered for Gina is 8.
Frequently Asked Questions
Q1: Why do I need to complete the 1099 worksheet even if I think it doesn’t apply to me?
It is essential to complete the 1099 worksheet to ensure compliance with IRS reporting requirements. Even if you believe there were no distributions or events to report, confirming this information is necessary. Failing to submit the worksheet could result in compliance issues or penalties. If you receive the worksheet, action is required on your part to verify and report any relevant transactions.
Q2: Why did I receive this email when I have a recordkeeper (e.g., John Hancock, Empower, American Funds)?
Our records indicate that your plan holds assets with another entity outside of the primary recordkeeper. As your Third-Party Administrator (TPA), we must ensure all required 1099-R forms are prepared and filed before applicable deadlines. This applies to any distributions (withdrawals or payments) from separate accounts outside your main recordkeeper. Having this information is critical for timely and accurate 1099-R preparation, maintaining compliance with IRS and Department of Labor regulations, as well as proper plan management.
Please note that any distributions processed from entities/accounts held outside of the primary recordkeeper will still be provided a 1099-R by your recordkeeper.
Q3: Why did I receive two emails simultaneously? Are they duplicates?
If you received two emails, they are not duplicates. Our records show that your organization sponsors both a 401(k) plan and a Cash Balance/Defined Benefit Plan. Each email pertains to a separate plan and its unique reporting requirements. It’s important to review and respond to both emails to ensure each plan’s compliance needs are met. If you need clarification, feel free to reach out for assistance.
Q4: Why am I receiving this email and these instructions?
You are receiving this email because you are the primary point of contact for your plan. It is your responsibility to review the provided information and take any necessary steps to ensure the plan remains compliant with IRS regulations. Collaborating with your financial advisor or CFO may be helpful. Your prompt attention to this matter helps prevent potential issues for both you and the plan participants.
Q5: What is the deadline for submitting the completed worksheet?
You must submit the completed worksheet no later than Monday, January 9th, 2025 via the upload link provided at the top of the worksheet. Submission via fax or email is also acceptable. Ensuring timely submission helps maintain compliance and prevents unnecessary delays.
Q6: How do I report a participant who took both a rollover and a lump-sum distribution?
You should enter separate rows for each type of distribution in the worksheet, specifying the amounts and corresponding codes for each. This ensures accurate and complete reporting of all distribution types.
Q7: What if no taxes were withheld from a participant’s distribution?
If no taxes were withheld, indicate zero in the column next to “TO IRS FOR TAX W/H“. This confirms that no tax amount was remitted to the IRS for that particular distribution.
Q8: How do I handle reporting for a participant who has passed away?
For deceased participants, use distribution code 4. Replace the participant’s information with the beneficiary’s details where applicable. This ensures accurate reporting and proper handling of beneficiary distributions.
Q9: Can I get assistance if I’m unsure how to complete a section?
Yes. If you need help, you can call us at (305) 595-5500 ext. 235 or email participant.services01@pensionnetwork.net. We are here to guide you through any unclear sections to ensure accurate and compliant reporting.
Q10: Should I include distributions that were rolled over directly to another plan or IRA?
Yes. All distributions, including direct rollovers, must be reported. Use code G for direct rollovers in the worksheet. This ensures that all movement of funds is accurately reflected in the final reporting.
Q11: What is PS58 cost, and why do I need a 1099-R tax form for it?
PS58 cost refers to the taxable value of life insurance protection provided as part of your retirement plan. If your plan includes life insurance coverage, the IRS requires reporting the annual value of this coverage as taxable income to the participant. A 1099-R is issued to report this taxable income, ensuring compliance with IRS regulations and accurate reflection of the participant’s taxable income for the year.
Q12: Where can I find the PS58 cost for my plan?
If your plan includes life insurance, the PS58 cost is typically provided by your life insurance company in a letter or statement issued near the end of the calendar year. This document details the cost of the life insurance coverage provided to participants. If you have not received this information, contact your life insurance provider directly. Confirming whether PS58 costs apply is critical for accurate tax reporting.