You’ll receive an IRS Form 1099-R if you’ve received a distribution of at least $10 from a retirement account, pension, annuity, or variety of other plans.
Today’s post can be used as a reference when deciphering the code(s) found in Box 7, which is the distribution code(s) box of your Form 1099-R.
Who completes Form 1099-R?
First of all, it’s good to know that the institution who made distributions–and not the individual receiving distributions–will complete the Form 1099-R. The institution will then send copies of the form to the IRS and to the individual who received the distribution.
When should a Form 1099-R be sent?
A Form 1099-R should be sent to anyone who received a distribution of at least $10 from any of the following:
- Retirement plan
- Profit-sharing plan
- Individual Retirement Arrangement (IRA)
- Annuity
- Pension
- Insurance contract
- Survivor benefit plan
- Permanent and total disability payment under life insurance contract
- Charitable gift annuity
What do the codes in the distribution code(s) box of Form 1099-R mean?
| Code | Meaning |
|---|---|
| 1 | Early distribution, no known exception, for taxpayers under age 59 ½. |
| 2 | Early distribution, exception applies, for taxpayers under age 59 ½. |
| 3 | Disability, for taxpayers avoiding early distribution penalties due to a disability. |
| 4 | Death, for distributions made to a beneficiary, estate, or trust. |
| 5 | Prohibited transaction, for when an IRA-prohibited transaction occurred and the account is no longer an IRA. |
| 6 | Section 1035 exchange, for a tax-free exchange of life insurance, annuity, qualified long-term care insurance, or endowment contracts. |
| 7 | Normal distribution, for taxpayers over the age of 59 ½. |
| 8 | Excess contributions plus earnings/excess deferrals and/or taxable earnings, for excess contributions deposited and returned within the same year. |
| 9 | Cost of current life insurance protection, for premiums paid by a Qualified Retirement Plan (QRP) trustee or a custodian for insurance. |
| A | May be eligible for a 10-year tax option, for lump-sum distributions made to those born before January 2, 1936. See Form 4972 for more information. |
| B | Designated Roth account distribution. If you see this code along with an amount in Box 11, see Form 5329 for more information. |
| C | Reportable death benefits under section 6050Y. |
| D | Annuity payments from nonqualified annuities that may be subject to tax under section 1411. |
| E | Distributions under Employee Plans Compliance Resolution System (EPCRS), for when excess employer contributions and applicable earnings under a SEP or SIMPLE IRA plan are returned to the employer with the IRA owner’s consent. |
| F | Charitable gift annuity. |
| G | Direct rollover of a distribution to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA. |
| H | Direct rollover of a designated Roth account distribution to a Roth IRA. |
| J | Early distribution from a Roth IRA, no known exception, for taxpayers under age 59 ½. |
| K | Distribution of traditional IRA assets not having a readily available Fair Market Value (FMV). |
| L | Loans treated as distributions. |
| M | Qualified plan loan offset. |
| N | Recharacterized IRA contribution, for contributions recharacterized within the same year. |
| P | Excess contributions plus earning/excess deferrals and/or taxable earnings for excess contributions deposited 1 year prior to the tax year in which they were returned (for example, contributions deposited in 2022 and returned in 2023). |
| Q | Qualified distributions from a Roth IRA, for those who have completed the five year waiting period and are over the age of 59 ½, have died, or are disabled without providing proof of disability. |
| R | Recharacterized IRA contribution, for contributions recharacterized in the following year (for example, contributions deposited in 2022 and recharacterized in 2023). |
| S | Early distribution from a SIMPLE IRA in the first two years of the account, no known exceptions, for taxpayers under age 59 ½. |
| T | Roth IRA distribution, exception applies, for those who have not completed the five year waiting period and are over the age of 59 ½, have died, or are disabled without providing proof of disability. |
| U | Dividend distribution from an Employee Stock Ownership Plan (ESOP) under section 404(k). This distribution isn’t eligible for rollover. |
| W | Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements. |
| CheckBox | If the IRA/SEP/SIMPLE box is checked, you’ve received a traditional IRA, SEP, or SIMPLE distribution. |
*Note that there could be more than one code in the distribution code(s) box.
What if I didn’t receive a Form 1099-R that I should have received?
If you didn’t receive a Form 1099-R that you think you should have received and it’s after January 31, then you should contact the institution that made the distribution. After you’ve requested the form, if you still haven’t received the Form 1099-R by the end of February, then you should call the IRS and request that the IRS contact the payer on your behalf.
What if the information on my Form 1099-R is incorrect?
If the information on your Form 1099-R is incorrect, you should contact the institution that made the distribution and ask them to send you a corrected form. However, if you don’t receive a corrected form, you can call the IRS for assistance.
If you still don’t receive the corrected form and need to file your taxes before the deadline, you can use Form 4852 to estimate your distributions and complete your return. If you later find out that the information you provided on your tax return was incorrect, you can file a Form 1040-X to amend your return.
What if I have other questions about my Form 1099-R?
If you have other questions about your Form 1099-R or how your retirement account distributions are affecting your taxes, contact a CPA for help.
