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You should receive a Form 1099-R from the payer of the lump-sum distribution showing your taxable distribution and the amount eligible for capital gain treatment. If you do not receive Form 1099–R by February 1, 2005, you should contact the payer of your lump–sum distribution.
This will be considered taxable income. Let me know if you still have questions.
It does not matter what it was for. If the money was spent to pay a medical bill, you can avoid the 10% early disbursement penalty on THAT PORTION of the distribution. But you will still have to pay the tax on the distribution.
Include the amount withheld on your 1099R in the total on line 63 of Form 1040 or line 39 of Form 1040A. You cannot use Form 1040EZ if you received payments reported on Form 1099-R.
Does this clarify it for you?