L1: code 2Hello, and thanks so much for the service you provide. My question: If the financial institution codes the 1099R with a code 2, I do NOT have to file a form 5329….is that correct?2010-01-17 02:01, By: TammyH, IP: [188.8.131.52]
L2: code 2
Code 2 = Early distribution, exception applies (under age 59_).
You are corrent, if box 7 contains a code of ‘2’, you do not have to file a form 5329. 2010-01-17 14:51, By: Gfw, IP: [184.108.40.206]
L3: code 2Also, if your SEPP continues beyond age 59.5, your 1099R should technically be coded with a 7 (normal distribution). The Code 2 no longer applies. If the code is a 7 there is no need to correct it. You might get two codes in the year you turn 59.5, but the Code 7 is OK. Code 1 is the one you need to correct unless you actually busted the plan.But of course if the code is a “1” because the custodian thinks you busted the SEPP, then you need to change it to a 7 after age 59.5 and you should also add an explanatory statement that your distribution amount did NOT modify your plan.2010-01-18 00:31, By: Alan S., IP: [220.127.116.11]
L4: code 2My SEPP will extend beyond 59 1/2. Please explain this…1. If I get a code 7 at that time ( after always getting code 2’s), do I then need to start filling out the form 5329?2. What If I continue to get code 2’s at 59 1/2? 3. One more….the explanatory note should state to the IRS that the SEPP is continuing to fulfill the requirements of 5 years or attainment of 50 1/2 whichever is longer, and the plan is not being modified in any way?2010-01-20 02:00, By: TammyH, IP: [18.104.22.168]
L5: code 21) First of all, there is no way to predict in advance how a particular custodian will handle their 1099R, particularly in the year you turn 59.5. The technically correct code is 2 for distributions prior to 59.5 and 7 for those made on or after 59.5. That means 2 different 1099R forms.If that is what you get, it is correct and no need to use a 5329.2) If you continue to get Code 2, while technically not correct, it still calls for a penalty waiver, so I would not bother to change it. It might actually mean that they do not have your correct age on file though.3) Yes, that should do.2010-01-20 23:41, By: Alan S., IP: [22.214.171.124]