Account closure.   Instructions for reporting a distribution as a result of an account closure have been added to the discussion of an IRA revocation on page R-2.

Permissive service credit.   The discussion under Transfers on page R-4 has been revised to include the purchase of permissive service credit.

Disclaimer of an IRA account balance.   Revenue Ruling 2005-36 provides for the qualified disclaimer of all or some of an IRA account balance under certain conditions. See Disclaimers on page R-5.

Certain Roth IRA conversions.   Regulations section 1.408A-4T discusses how to determine the fair market
value of an individual retirement annuity described in section 408(b) that is converted to a Roth IRA. See Roth IRA conversion on page R-7.

Box 2a. Taxable amount.   Reporting instructions have been changed for distributions under section 408(d)(5). See the instructions on page R-6.

Designated Roth account distributions.   Section 402A, which was added by the Economic Growth and Tax Relief Reconciliation Act of 2001, provides that a participant in a section 401(k) or 403(b) plan that includes a Roth contribution program may elect to make designated Roth account contributions to the plan. Designated Roth account contributions are reported on the participant's Form W-2. Designated Roth account distributions are reported separately to the participant. A new distribution code has been added to report these distributions, Code B—Designated Roth account distribution. Other rules relating to designated Roth accounts have been added throughout the instructions as applicable. Also, the form requires the trustee to report the first year of the designated Roth account contribution and the basis of the designated Roth account distribution. Note that the instructions to the recipient have been expanded, and appear on the back of Copy 2 as well as on the backs of Copies B and C. See Proposed Regulations sections 1.402(g)-1, 1.402A-1, 1.402A-2, 1.403(b)-2, 1.403(b)-3, and 1.403(b)-7.

Guide to Distribution Codes.   Distribution codes 1 and 2 have been revised for withdrawals by qualified reservists and certain public safety employees, respectively, based on provisions in the Pension Protection Act of 2006.

Account closure.   Instructions for reporting as a result of an account closure have been added to the discussion
of an IRA revocation. See IRA revocation or account closure on page R-12.

Contributions.   A caution has been added to remind filers that Form 5498 is required to be filed even after required minimum distributions or other payments have started. See page R-12.

Special reporting for U.S. Armed Forces in designated combat zones.   The Heroes Earned Retirement Opportunities (HERO) Act of 2006 amended section 219(f) so that combat pay that is excluded under section 112 is included in compensation for determining contributions to traditional and Roth IRAs. This rule is applied retroactively to allow contributions for tax years 2004 and 2005. See page R-13 for the special reporting rules.