1

Early distribution, no known exception

Use Code 1 only if the participant has not reached age 59^1/2, 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, a qualified reservist distribution, or a qualified birth or adoption distribution under section 72(t)(2)(B), (D), (E), (F), (G), or (H). Code 1 must also be used even if a taxpayer is 591/2 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.

2

Early distribution, exception applies

Use Code 2 only if the participant has not reached age 59^1/2 and you know the distribution is the any of the following.

• A Roth IRA conversion (an IRA converted to a Roth IRA).
• A distribution made from a qualified retirement plan or IRA because of an IRS levy under section 6331.
• A governmental section 457(b) plan distribution that is not subject to the additional 10% tax. But see Governmental section 457(b) plans, for information on distributions that may be subject to the 10% additional tax.
• A distribution from a qualified retirement plan after separation from service in or after the year the participant has reached age 55.
• A distribution from a governmental defined benefit plan to a public safety employee (as defined in section 72(t)(10)(B)) after separation from service, in or after the year the employee has reached age 50.
• A distribution that is part of a series of substantially equal periodic payments, as described in section 72(q), (t), (u), or (v).
• A distribution that is a permissible withdrawal under an eligible automatic contribution arrangement (EACA).
• Any other distribution subject to an exception under section 72(q), (t), (u), or (v) that is not required to be reported using Code 1, 3, or 4.

3

Disability

For these purposes, see section 72(m)(7).

4

Death

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.

5

Prohibited transaction

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

6

Section 1035 exchange

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

7

Normal distribution

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 591/2; (b) for a Roth IRA conversion if the participant is at least age 591/2; 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). See Rev. Proc. 2008-42, 2008-29 I.R.B. 160, available at IRS.gov/irb/2008-29_IRB#RP-2008-42. Generally, use Code 7 if no other code applies. Do not use Code 7 for a Roth IRA.

Note. Code 1 must be used even if a taxpayer is age 59^1/2 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.

8

Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2023

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.

9

Cost of current life insurance protection

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.

A

May be eligible for 10-year tax option

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.

B

Designated Roth account distribution

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.

C

Reportable death benefits under section 6050Y

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

D

Annuity payments from nonqualified annuities and distributions from life insurance contracts that may be subject to tax under section 1411.

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).

E

Distributions under Employee Plans Compliance Resolution System (EPCRS)

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

F

Charitable gift annuity

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

G

Direct rollover and direct payment

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.

H

Direct rollover of a designated Roth account distribution to a Roth IRA

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

J

Early distribution from a Roth IRA

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.

K

Distribution of traditional IRA assets not having a readily available FMV

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

• Stock, other ownership interest in a corporation, short- or long-term debt obligations, not readily tradable on an established securities market;
• Ownership interest in a limited liability company (LLC), partnership, trust, or similar entity (unless the interest is traded on an established securities market);
• Real estate;
• Option contracts or similar products not offered for trade on an established option exchange; or
• Other asset that does not have a readily available FMV.

L

Loans treated as deemed distributions under section 72(p)

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

M

Qualified plan loan offset

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.

N

Recharacterized IRA contribution made for 2023

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

P

Excess contributions plus earnings/excess deferrals taxable in 2022

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.

Q

Qualified distribution from a Roth IRA

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

• The participant has reached age 59^1/2,
• The participant died, or
• The participant is disabled.

If any other code, such as 8 or P, applies, use Code J.

R

Recharacterized IRA contribution made for 2022

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

S

Early distribution from a SIMPLE IRA in first 2 years, no known exception

Use Code S only if the distribution is from a SIMPLE IRA in the first 2 years, the employee/taxpayer has not reached age 59^1/2, 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.

T

Roth IRA distribution, exception applies

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:

• The participant has reached age 59^1/2,
• The participant died, or
• The participant is disabled.

If any other code, such as 8 or P, applies, use Code J.

U

Dividends distributed from an ESOP under section 404(k)

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.