Distribution Code 1

If the distribution code entered is "1", the taxable amount of the distribution is subjected to the 10% penalty calculation on Form 1040, line 59 and carried to Form 1040, line 15 or line 16 as a pension or IRA distribution. If the Form 5329 is prepared due to other early distributions, this entry also carries to that form. Otherwise, the Form 5329 is not prepared.

If the distribution code entered is "1B" or "1D", the taxable amount of the distribution carries to Form 1040, line 16 as a pension distribution. To subject it to the 10% early distribution penalty, an entry must be made in the "Form 5329 code" field under the Retirement Plan Taxes section.

If the distribution code entered is "18" or "1K", the taxable amount of the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution. To subject it to the 10% early distribution penalty, an entry must be made in the "Form 5329 code" field under the Retirement Plan Taxes section.

If the distribution code entered is "1L", the taxable amount of the distribution carries to Form 5329, line 1 and subjected to the 10% penalty calculation. It also carries to Form 1040, line 16 as a pension distribution.

If the distribution code entered is "1P", the taxable amount of the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution. To subject it to the 10% early distribution penalty, an entry must be made in the "Form 5329 code" field under the Retirement Plan Taxes section, but read the following caution.

Caution: A code of P means this is a distribution from contributions made in a prior year. Per the federal instructions, the distribution should be taxed in the year the contributions were made. An amended return may be necessary and the distribution should not be entered in 2017.

Distribution Code 2

If the distribution code entered is "2", the taxable amount of the distribution is assumed as an early distribution with a known exception. No Form 5329 is prepared and the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution, but read the following note.

Note: If this distribution is a Roth IRA conversion, the distribution should be entered in the Roth IRA Information section > Total distributions converted to Roth IRAs field.

If the Form 5329 is desired, an entry must be made in the "Form 5329 code" field under the Retirement Plan Taxes section.

If the distribution code entered is "2B" or "2D", the taxable amount of the distribution carries to Form 1040, line 16 as a pension distribution and no Form 5329 is prepared. If the Form 5329 is desired, an entry must be made in the "Form 5329 code" field under the Retirement Plan Taxes section.

If the distribution code entered is "28" or "2K", the taxable amount of the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution and no Form 5329 is prepared. If the Form 5329 is desired, an entry must be made in the "Form 5329 code" field under the Retirement Plan Taxes section.

If the distribution code entered is "2P", the taxable amount of the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution. If the Form 5329 is desired, an entry must be made in the "Form 5329 code" field under the Retirement Plan Taxes section, but read the following caution.

Caution: A code of P means this is a distribution from contributions made in a prior year. Per the federal instructions, the distribution should be taxed in the year the contributions were made. An amended return may be necessary and the distribution should not be entered in 2017.

Distribution Code 3

If the distribution code entered is "3" or "3D", the" X if IRA/SEP/SIMPLE plan" field is left blank and "X if IRA" field is left blank, and the individual making the distribution is under age 65, the taxable amount of the distribution carries to Form 1040, line 7 as wages and not to Form 1040, line 16 as a pension distribution.

If the "X if IRA/SEP/SIMPLE plan" field is marked or "X if IRA" field is marked, the distribution always carries to the Form 1040, line 15 as an IRA distribution.

Distribution Code 4

If the distribution code entered is "4", "48", "4K" or "4L", the distribution carries to Form 1040, line 15 or 16 as a taxable pension or IRA distribution.

If the distribution code entered is "4B" or "4D", the distribution carries to Form 1040, line 16 as a taxable pension distribution.

If the distribution code entered is "4A", the distribution carries to Form 1040, line 15 or 16 as a taxable pension or IRA distribution, but read the following note.

Note: If this distribution is eligible for the 10-year tax option on Form 4972, the distribution should not be entered here, but instead entered on the Tax on Lump-Sum Distributions worksheet.

If the distribution code entered is "4P" the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution, but read the following caution.

Caution: A code of P means this is a distribution from contributions made in a prior year. Per the federal instructions, the distribution should be taxed in the year the contributions were made. An amended return may be necessary and the distribution should not be entered in 2017.

If the distribution code entered is "4G" or "4H", the gross amount of the distribution carries to Form 1040, line 15a or 16a and the taxable amount is considered zero unless specifically overridden. The supporting statement references this as a rollover.

Distribution Code 5

If the distribution code entered is "5", the taxable amount of the distribution carries to Form 5329, line 1 and subjected to the 10% penalty calculation. It also carries to Form 1040, line 16 as a pension distribution.

Distribution Code 6

If the distribution code entered is "6" or "6W", the distribution is treated as a tax-free Section 1035 exchange. The distribution carries to Form 1040, line 16a and the taxable amount is considered zero unless specifically overridden.

Distribution Code 7

If the distribution code entered is "7" or "7K", the distribution is treated as a normal distribution from a pension or IRA. The distribution carries to Form 1040, line 15 or 16, but read the following note.

Note: If this distribution is a Roth IRA conversion, the distribution should be entered in the Roth IRA Information section > Total distributions converted to Roth IRAs field.

If the distribution code entered is "7B" or "7D", the taxable amount of the distribution carries to Form 1040, line 15 as an IRA distribution.

If the distribution code entered is "7A", the distribution is treated as a normal distribution from a pension or IRA and carried to Form 1040, line 15 or 16, but read the following note.

Note: If this distribution is eligible for the 10-year tax option on Form 4972, the distribution should not be entered here, but instead entered on the Tax on Lump-Sum Distributions worksheet.

Distribution Code 8

If the distribution code entered is "8" and the "IRA/SEP/SIMPLE" and the "X if IRA" fields are left blank, the amount entered in "Gross distribution" plus any amount in the "Loss attributable to excess deferral" carries to Form 1040, line 7 as wages and not to Form 1040, line 16 as a pension distribution.

If a code of "8" is entered with any other code, such as "8B", "8J" or "8K", or the "IRA/SEP/SIMPLE" or "X if IRA" field is checked, the amount entered in "Gross distribution" carries to Form 1040, line 15 or 16 as a pension or IRA distribution and any entry in the "Loss attributable to excess deferral" field is ignored.

See the explanation under Distribution code "1", "2" and "4" for the treatment of Distribution codes "81", "82" and "84".

Distribution Code 9

If the distribution code entered is "9", the distribution carries to Form 1040, line 16 as a pension distribution.

Distribution Code A

If the distribution code entered is "A", the distribution carries to Form 1040, line 16 as a pension distribution, but see the following note.

Note: If this distribution is eligible for the 10-year tax option on Form 4972, the distribution should not be entered here, but instead entered on the Tax on Lump-Sum Distributions worksheet.

See the explanation under Distribution code "4" and "7" for the treatment of Distribution code "A4" and "A7".

 

Distribution Code B

If the distribution code entered is "B", "BL" or "BU", the taxable amount of the distribution carries to Form 1040, line 16 as a pension distribution.

If the distribution code entered is "BG", the gross amount of the distribution carries to Form 1040, line 16a and the taxable amount is considered zero unless specifically overridden. The supporting statement references this as a rollover.

If the distribution code entered is "BP" the distribution carries to Form 1040, line 16 as a pension distribution, but read the following caution.

Caution: A code of P means this is a distribution from contributions made in a prior year. Per the federal instructions, the distribution should be taxed in the year the contributions were made. An amended return may be necessary and the distribution should not be entered in 2017.

See the explanation under Distribution code "1", "2", "4", "7" and "8" for the treatment of Distribution code "B1", "B2", "B4", "B7" and "B8".

Distribution Code D

If the distribution code entered is "D", the distribution carries to Form 1040, line 16 as a pension distribution and also carries to Form 8960, line 3 as a non-qualified pension plan subject to the net investment income tax.

See the explanation under Distribution code "1", "2", "3", "4" and "7" for the treatment of Distribution codes "D1", "D2", "D3", "D4" and "D7".

Distribution Code E

If the distribution code entered is "E", the distribution carries to Form 1040, line 16 as a pension distribution.

Distribution Code F

If the distribution code entered is "F", the distribution carries to Form 1040, line 16 as a pension distribution.

Distribution Code G

If the distribution code entered is "G" or "GK", the gross amount of the distribution carries to Form 1040, line 15a or 16a and the taxable amount is considered zero unless specifically overridden. The supporting statement references this as a rollover.

See the explanation under Distribution code "4" and "B" for the treatment of Distribution code "G4" or "GB".

Distribution Code H

If the distribution code entered is "H", the gross amount of the distribution carries to Form 1040, line 15a or 16a and the taxable amount is considered zero unless specifically overridden. The supporting statement references this as a rollover.

See the explanation under Distribution code "4" for the treatment of Distribution code "H4".

Distribution Code J

If the distribution code entered is "J", the gross distribution carries to Form 8606 as a distribution from a Roth IRA, but see the following note.

Note: If there is any prior or current year basis, the basis information should be entered in the Roth IRA Information section.

Caution: The taxable amount field should be left blank. The taxable amount of the Roth IRA distribution is calculated on the Form 8606. A taxable amount entry is ignored for Form 8606 purposes. In order to calculate the Form 5329 using this entry, leave the Form 5329 code field blank and make entries on the Retirement Plan Taxes worksheet with a code of "10" on the Early Distributions section, Early distribution type field.

See the explanation under Distribution code "8" for the treatment of Distribution code "J8".

If the distribution code entered is "JP" the gross distribution does not carry to Form 8606 as a distribution from a Roth IRA due to the following caution.

Caution: A code of P means this is a distribution from contributions made in a prior year. Per the federal instructions, the distribution should be taxed in the year the contributions were made. An amended return may be necessary and the distribution should not be entered in 2017.

Distribution Code K

If the distribution code entered is "K", the gross distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution.

See the explanation under Distribution code "1," "2," "4","7", "8" or "G" for the treatment of Distribution code "K1", "K2", "K4", "K7", "K8" and "KG".

Distribution Code L

If the distribution code entered is "L", the gross distribution carries to Form 1040, line 16 as a pension distribution.

See the explanation under Distribution code "1", "4" and "B" for the treatment of Distribution code "L1", "L4," and "LB".

Distribution Code N

If the distribution code entered is "N", the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution, but see the following note.

Note: If this is a recharacterization of a Roth IRA contribution back to a traditional IRA, this entry should be made on the IRA Information > Recharacterization of contributions field. Please read the instructions to that field to determine the proper treatment for this distribution. 

But if this is a recharacterization of Roth IRA distribution, this amount should be netted against any Roth IRA conversion entered in the Roth IRA Information section > Total distributions converted to Roth IRAs field.

If this was a complete recharacterization from a Roth IRA to a traditional IRA, the Gross distribution field should be entered with a zero for the Taxable amount field. The Form 8606 is not required in this situation.

Distribution Code P

If the distribution code entered is "P" and the "IRA/SEP/SIMPLE" and the "X if IRA" fields are left blank, the amount entered in "Gross distribution" plus any amount in the "Loss attributable to excess deferral" carries to Form 1040, line 7 as wages and not to Form 1040, line 16 as a pension distribution.

If a code of "P" is entered with any other code or the "IRA/SEP/SIMPLE" or "X if IRA" field is checked, the amount entered in "Gross distribution" carries to Form 1040, line 15 or 16 as a pension or IRA distribution and any entry in the "Loss attributable to excess deferral" field is ignored, but read the following caution.

Caution: A code of P means this is a distribution from contributions made in a prior year. Per the federal instructions, the distribution should be taxed in the year the contributions were made. An amended return may be necessary and the distribution should not be entered in 2017.

See the explanation under Distribution code "1," "2," "4", "B," and "J" for the treatment of Distribution code "P1," "P2," "P4", "PB," and "PJ".

Distribution Code Q

If the distribution code entered is "Q", the distribution does not carry to Form 8606 but instead carries to Form 1040 as an IRA distribution with the gross distribution carrying to line 15a and the taxable amount equal to zero.

Since this is a qualified distribution, the Form 8606 is not necessary and the earnings are tax free.

Distribution Code R

If the distribution code entered is "R", the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution, but see the following note.

Note: If this is a recharacterization of a Roth IRA contribution back to a traditional IRA, this entry should be made on the IRA Information > Recharacterization of contributions field. Please read the instructions to that field to determine the proper treatment for this distribution. 
But if this is a recharacterization of Roth IRA distribution, this amount should be netted against any Roth IRA conversion entered in the Roth IRA Information section > Total distributions converted to Roth IRAs field.
If this was a complete recharacterization from a Roth IRA to a traditional IRA, the Gross distribution field should be entered with a zero for the Taxable amount field. The Form 8606 is not required in this situation.

Distribution Code S

If the distribution code entered is "S", the SIMPLE IRA distribution carries to Form 5329, line 1 and subjected to the 25% penalty calculation. It also carries to Form 1040, line 15 as a distribution from an IRA.

Distribution Code T

If the distribution code entered is "T", the gross distribution is treated the same as code "J" above, with the same cautions, except the distribution is not carried to Form 5329, but see the following note.

Any entry made for taxable amount is ignored.

Note A code of "T" means the issuer of the 1099-R knows the recipient is over age 59 1/2 but does not know if the Roth IRA was held at least five years. So if the preparer believes this is a qualified distribution and the distribution is not subject to tax, they need to use code "Q" instead.

 

Distribution Code U

If the distribution code entered is "U", the gross distribution carries to Form 1040, line 16 as a pension distribution.

See the explanation under Distribution code "B" for the treatment of Distribution code "UB".

Distribution Code W

If the distribution code entered is "W" or "W6", the distribution is treated as a charge or payment for purchasing qualified long-term care insurance contracts and are excludable from gross income under section 72(e)(11). The distribution carries to Form 1040, line 16a and the taxable amount is considered zero unless specifically overridden.