IRS Form 1099-R Distribution Codes Explained

Form 1099-R, Distributions From Pensions, Annuities, Retirement, or Profit-Sharing Plans, is used to report passive income and distributions from a retirement plan that exceeds $10 in value. The purpose of Form 1099-R is to report the taxable amount of the distribution and any applicable taxes withheld. The form provides information to the recipient and the IRS about the distributions made, which you would also use to report income on your individual tax return.

Box 7 of IRS Form 1099-R is used to indicate the distribution code that corresponds to the type of distribution you received from a retirement plan, which determines whether it’s a taxable or non-taxable event.

Box 7 codes overview

Box 7 Code	Description	Used with code (if applicable)
1	Early distribution, no known exception	8, B, D, K, L, M, or P
2	Early distribution, exception applies	8, B, D, K, L, M, or P
3	Disability	D
4	Death	8, A, B, D, G, H, K, L, M, or P
5	Prohibited transaction	None
6	Section 1035 exchange	W
7	Normal distribution	A, B, D, K, L, or M
8	Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2023.	1, 2, 4, B, J, or K
9	Cost of current life insurance protection	None
A	May be eligible for 10-year tax option	4 or 7
B	Designated Roth account distribution.	1, 2, 4, 7, 8, G, L, M, P, or U
C	Reportable death benefits under section 6050Y.	D
D	Annuity payments from nonqualified annuities and distributions from life insurance contracts that may be subject to tax under section 1411.	1, 2, 3, 4, 7, or C
E	Distributions under Employee Plans Compliance Resolution System (EPCRS)	None
F	Charitable gift annuity	None
G	Direct rollover and direct payment	4, B, or K
H	Direct rollover of a designated Roth account distribution to a Roth IRA	4
J	Early distribution from a Roth IRA	8 or P
K	Distribution of traditional IRA assets not having a readily available FMV	1, 2, 4, 7, 8, or G
L	Loans treated as deemed distributions under section 72(p)	1, 2, 4, 7, or B
M	Qualified plan loan offset	1, 2, 4, 7, or B
N	Recharacterized IRA contribution made for 2022 and recharacterized in 2023.	None
P	Excess contributions plus earnings/excess deferrals taxable in 2022.	1, 2, 4, B, or J
Q	Qualified distribution from a Roth IRA	None
R	Recharacterized IRA contributions made for 2022	None
S	Early distribution from a SIMPLE IRA in first 2 years, no known exception	None
T	Roth IRA distribution, exception applies	None
U	Dividends distributed from an ESOP under section 404(k)	B
W	Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements	6

Box 7 codes explained

Code 1

Use Code 1 only if the participant has not reached age 59½, and you do not know if any of the exceptions under Code 2, 3, or 4 apply. However, use Code 1 even if the distribution is made for medical expenses, health insurance premiums, qualified higher education expenses, a first-time home purchase, or a qualified reservist distribution under section 72(t)(2)(B), (D), (E), (F), or (G). Code 1 must also be used even if a taxpayer is 59½ or older and he or she modifies a series of substantially equal periodic payments under section 72(q), (t), or (v) prior to the end of the 5-year period which began with the first payment.

Code 2

Use Code 2 only if the participant has not reached age 59½ and you know the distribution is the following.

Code 3

Use code 3, Disability, when proof of disability is provided at the time of distribution. Verification is not required by the IRS, but is highly recommended. If no proof is provided, the financial organization should enter code 1 in Box 7 (the individual can file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to still use the disability exception).

Code 4

Use Code 4 regardless of the age of the participant to indicate payment to a decedent’s beneficiary, including an estate or trust. Also use it for death benefit payments made by an employer but not made as part of a pension, profit-sharing, or retirement plan. Also use it for payments of reportable death benefits.

Code 5

Use Code 5 if there was a prohibited transaction involving the IRA account. Code 5 means the account is no longer an IRA.

Code 6

Use Code 6 to indicate the tax-free exchange of life insurance, annuity, long-term care insurance, or endowment contracts under section 1035.

Code 7

Use Code 7: (a) for a normal distribution from a plan, including a traditional IRA, section 401(k), or section 403(b) plan, if the employee/taxpayer is at least age 59½; (b) for a Roth IRA conversion if the participant is at least age 59½; and (c) to report a distribution from a life insurance, annuity, or endowment contract and for reporting income from a failed life insurance contract under section 7702(g) and (h). Generally, use Code 7 if no other code applies. Do not use Code 7 for a Roth IRA.

Code 8

Use Code 8 for an IRA distribution under section 408(d)(4), unless Code P applies. Also use this code for corrective distributions of excess deferrals, excess contributions, and excess aggregate contributions, unless Code P applies. See Corrective Distributions, in the IRS instructions, and IRA Revocation or Account Closure, in the IRS instructions for Form 1099-R, for more information.

Code 9

Use Code 9 to report premiums paid by a trustee or custodian for current life or other insurance protection. See the instructions for box 2a, in the IRS instructions, for more information.

Code A

Use Code A only for participants born before January 2, 1936, or their beneficiaries to indicate the distribution may be eligible for the 10-year tax option method of computing the tax on lump-sum distributions (on Form 4972, Tax on Lump-Sum Distributions). To determine whether the distribution may be eligible for the tax option, you need not consider whether the recipient used this method (or capital gain treatment) in the past.

Code B

Use Code B for a distribution from a designated Roth account. But use Code E for a section 415 distribution under EPCRS (see Code E) or Code H for a direct rollover to a Roth IRA.

Code C

Use code C for a distribution to report payments of reportable death benefits.

Code D

Use Code D for a distribution from any plan or arrangement not described in section 401(a), 403(a), 403(b), 408, 408A, or 457(b).

Code E

See Distributions under Employee Plans Compliance Resolutions System (EPCRS) in the IRS instructions for Form 1099-R for more information.

Code F

See Charitable gift annuities in the IRS instructions for Form 1099-R for more information.

Code G

Use Code G for a direct rollover from a qualified plan, a section 403(b) plan, or a governmental section 457(b) plan to an eligible retirement plan (another qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA). See Direct Rollovers, in the IRS instructions. Also use Code G for a direct payment from an IRA to an accepting employer plan, and for IRRs that are direct rollovers. Do not use Code G for a direct rollover from a designated Roth account to a Roth IRA. Use Code H.

Code H

Use Code H for a direct rollover of a distribution from a designated Roth account to a Roth IRA.

Code J

Use Code J for a distribution from a Roth IRA when Code Q or Code T does not apply. But use Code 2 for an IRS levy and Code 5 for a prohibited transaction.

Code K

Use Code K to report distributions of IRA assets not having a readily available FMV. These assets may include:

Code L

Do not use Code L to report a plan loan offset. See Loans Treated as Distributions, in the IRS instructions.

Code M

Use code M for a qualified plan loan offset. Use code M for a qualified plan loan offset distribution due to severance from employment or termination of the plan. Also, see Plan loan offsets, in the IRS instructions.

Code N

Use Code N for a re-characterization of an IRA contribution made for 2022 and re-characterized in 2023 to another type of IRA by a trustee-to-trustee transfer or with the same trustee.

Code P

See the explanation for Code 8. The IRS suggests that anyone using Code P for the refund of an IRA contribution under section 408(d)(4), including excess Roth IRA contributions, advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the contributions were made.

Code Q

Use Code Q for a distribution from a Roth IRA if you know that the participant meets the 5-year holding period and:

Code R

Use Code R for a re-characterization of an IRA contribution made for 2022 and re-characterized in 2023 to another type of IRA by a trustee-to-trustee transfer or with the same trustee.

Code S

Use Code S only if the distribution is from a SIMPLE IRA in the first 2 years, the employee/taxpayer has not reached age 59½, and none of the exceptions under section 72(t) is known to apply when the distribution is made. The 2-year period begins on the day contributions are first deposited in the individual’s SIMPLE IRA. Do not use Code S if Code 3 or 4 applies.

Code T

Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:

Code U

Use Code U for a distribution of dividends from an employee stock ownership plan (ESOP) under section 404(k). These are not eligible rollover distributions. Do not report dividends paid by the corporation directly to plan participants or their beneficiaries. Continue to report those dividends on Form 1099-DIV.

Code W

Use Code W for charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements which are excludable under section 72(e)(11) against the cash value of an annuity contract or the cash surrender value of a life insurance contract.