Distribution Codes

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L1: Distribution CodesCodes 1 & 2- I understand as ditribution no known exception and distribution know exception. What does a code of 7 indicate?2008-01-31 08:31, By: sem, IP: [74.237.252.117]
L2: Distribution CodesWhat happens if a 1 code is on the 1099R in error-because account was shifted to another custodian? Transferring institution will not correct it.2008-01-31 09:25, By: Mountinfun, IP: [216.215.245.190]

L2: Distribution CodesSem,
Code 7 means “normal distribution”. This is issued when IRA withdrawals are made after reaching age 59 1/2, and in some cases thatI recall reading on this site, you may even get that code from a custodian in the year your SEPP is running and you cross that age boundary, even if you still have more time to go to meet your 5 year minimum plan, and in that “cross over year”, you may get 2 1099-R”s, with other one either coded “2” (getting more rare) or coded “1” (whichrequires you to file 5329 form with you tax return to avoid the penalty) and the other 1099 coded with a “7”. The code 7 1099-R would be for the dollar value of payments made after reaching 59 1/2. Go to page 11 of 1099-R instructions from IRS on link below to review all of the codes and their meanings.
http://www.irs.gov/pub/irs-pdf/i1099r.pdf

mountin… It is confusing to ask a second/different question in a posting, but now that you have– Your answer is that it will be necessary for you to file form 5329 with your tax return, where you stipulate that no penalty applies to the $$ from this 1099-R coded with a ”1” because of SEPP.Many people on SEPP plans have to file form 5329each year, as most SEPP plan custodians no longer issue 1099-R”s with code “2” to begin with. Keep your documentation so you can prove it later if audited.
KEN2008-01-31 11:03, By: Ken, IP: [75.67.65.254]

L2: Distribution CodesHello all,
My husband has received a Code 7 for his pension from a position he had for 37 years in manufacturing. His pension began at age 55, he is now 58. Always had Code 7.

Cheri2008-01-31 11:37, By: Cheri, IP: [75.47.81.219]

L2: Distribution CodesCheri,
I am also getting a pension, (defined benefit plan from private industry job) and it carries a code “2”. I am 57 years old.If his payments are “A distribution from a qualified pension plan after separation from service where the taxpayer has reached age 55” then I think they should also be coding his 1099-Rwith a “2” — according to the explanation for code “2” in the 1099-R instructionsin that link I supplied above (table is on page 11). Perhaps someone else canexplain the code 7 on his pension payment 1099”s for someone under 59 1/2. KEN2008-01-31 20:32, By: Ken, IP: [75.67.65.254]