 1099-R retirement and annuity distributions can be taxable, penalized or exempt.
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Box 1 of form 1099-R is the gross distribution. The software determines how much the taxable amount in box 2a is if you select the checkbox 2b "Taxable amount not determined". The determination is based on the distribution code selected in box 7.
For example, code J means that you met the five year holding period, but because this was an early withdrawal without any known exceptions, the earnings are taxable and a 10% early distribution penalty may also apply.
If you believe the taxable amount should be different than the amount calculated in box 2a, use form 5329 to report taxes paid on qualifying plans to determine exemption.
Below are the distribution codes choices for box 7.
Article ID: 609
Created: Wed, Oct 11, 2017
Last Updated: Tue, Nov 9, 2021
Online URL: //kb.erosupport.com/article-609.html