On my 1099-R, what do the codes in box 7 mean?
This article reviews the codes found in Box 7 to help you identify the type of distribution you received.
Early distribution, no known exception (in most cases, under age 59 ½)
Early distribution, exception applies (under age 59 ½)
Death – regardless of the age of the employee/taxpayer to indicate to a decedent’s beneficiary, including an estate or trust. Also used for death benefit payments made by an employer but not made as part of a pension, profit-sharing, or retirement plan.
Prohibited Transaction – This generally means the account is no longer an IRA.
Section 1035 exchange (a tax-free exchange of life insurance, annuity, qualified long-term care insurance, or endowment contracts)
Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2017
Cost of current life insurance protection
May be eligible for 10-year tax option (see Form 4972)
Designated Roth account distribution
Note: If Code B is in box 7 and an amount is reported in box 10, see the instructions for Form 5329.
Annuity payments from nonqualified annuities that may be subject to tax under section 1411
Distributions under Employee Plan Compliance Resolution System (EPCRS)
Charitable gift annuity
Direct rollover of a distribution (other than a designated Roth account distribution) to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA
Direct rollover of a designated Roth account distribution to a Roth IRA
Early distribution from a Roth IRA, no known exception (in most cases, under age 59 ½)
Loans treated as distributions
Recharacterized IRA contribution made for 2017 and recharacterized in 2017
Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2016
Qualified distribution from a Roth IRA (participant meets the 5-year holding period, and 1) has reached age 59 ½ 2)has died, or 3) is disabled)
Recharacterized IRA contribution made for 2016 and recharacterized in 2017.
Early distribution from a SIMPLE IRA in first 2 years, no known exception (under age 59 ½)
Roth IRA distribution, exception applies
Dividend distribution from ESOP under sec. 404(k)
Note: This distribution is not eligible for rollover
Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements.
**If a loan is treated as a deemed distribution, it is reportable on Form 1099-R using the normal taxation rules of a retirement account. The distribution also may be subject to the 10% early distribution tax under Section 72(t). It is not eligible to be rolled over to an eligible retirement plan nor is it eligible for the 10-year tax option. On your Form 1099-R, enter Code L in Box 7. Also enter Code 1 or Code B, if applicable. Within your TaxSlayer Form 1099-R, you would enter "L1" for Box 7.