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Ask A CPA - Pension Distributions

1099-R -Codes

The codes identify the type of distribution, and whether a Form 5329 penalty is required. Code 1 identifies the distribution as an early distribution with no known exceptions subject to the 10% IRS Form 5329 penalty. Code 2 = early distribution but a exception applies and no penalty lis levied. Code 3 = Disability and no penalty required. Code 4 = Death and no penalty required. Code 5 = Prohibited transaction. Code 6 = Section 1035 tax free exchange. Code 7 = Normal distribution and no penalty required. Code 8 = Excess contribution. Code 9 = Cost of current life insurance protection.. Code A = May be eligible for 5 or 10 year averaging. Code B =designated Roth account distribution. E—Distributions under Employee Plans Compliance Resolution System (EPCRS). F—Charitable gift annuity G—Direct rollover and rollover contribution. H—Direct rollover of a designated Roth account distribution to a Roth IRA. J—Early distribution from a Roth IRA. L—Loans treated as deemed distributions under section 72(p). N—Re-characterized IRA contribution made for 2012. P—Excess contributions plus earnings/excess deferrals taxable in 2012. Q—Qualified distribution from a Roth IRA. R—Re-characterized IRA contribution made for 2012. S—Early distribution from a SIMPLE IRA in the first 2 years, no known exception. T—Roth IRA distribution, exception applies. U—Dividends distributed from an ESOP under section 404(k). W—Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements.

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