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Category: General Questions

On my 1099-R, what do the codes in box 7 mean?

Box 7 of 1099-R identifies the type of distribution received. These codes descriptions are taken directly from the back of form 1099-R. 

 

Code

Definition

1

Early distribution, no known exception (in most cases, under age 59½).

2

Early distribution, exception applies (under age 59½).

3

 Disability

4

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.

5

Prohibited Transaction - this generally means the account is no longer an IRA.

6

Section 1035 exchange (a tax-free exchange of life insurance, annuity, qualified long-term care insurance, or endowment contracts).

7

Normal distribution

8

Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2018.

9

Cost of current life insurance protection.

A

May be eligible for 10-year tax option (See Form 4972).

B

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.

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).

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 (in most cases, under age 59½)

K

Distribution of traditional IRA assets not having a readily available FMV (fair market value).

L

Loans treated as distributions.**

M

Qualified plan loan offset.

N

Recharacterized IRA contribution made for 2018 and recharacterized in 2018. 

P

Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2017.

Q

Qualified distribution from a Roth IRA.

R

Rechacterized IRA contribution made for 2017 and recharacterized in 2018.

S

Early distribution from a SIMPLE IRA in first 2 years, no known exception (under age 59½).

T

Roth IRA distribution, exception applies.

U

Dividend distribution from ESOP under section 404(k). NOTE: This distribution isn't eligible for rollover.

W

Charges or payment 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.

 

Within the program, if your loan is treated as a deemed distribution, please enter in box 7,  Code L plus Code 1 or Code B, whichever is applicable. To enter please:

* Federal Section

* Income (Enter Myself)

* IRA/Pension 1099-R, 1099-RRB

* Add or Edit Form 1099-R

* In box 7 enter L1 or LB, whichever is applicable to your situation