Form 1099-R is the IRS information return that reports distributions of $10 or more from pensions, annuities, profit-sharing and retirement plans, IRAs, and insurance contracts. The payer sends one copy to you and one to the IRS, and Box 7 carries the distribution code that tells the IRS how the payment should be taxed. That single code decides whether the 10% early-withdrawal penalty applies.
Form 1099-R reports money paid out of a retirement or annuity account during the tax year. Custodians, plan administrators, and insurers issue it to anyone who took a distribution of $10 or more, and they file a copy with the IRS. Box 1 shows the gross amount, Box 2a the taxable amount, and Box 7 a code that explains the type of distribution and whether a penalty applies.
What is Form 1099-R and who issues it?
Form 1099-R is an IRS information return that payers use to report distributions from retirement and annuity accounts. Banks, custodians, employer plan administrators, and insurance companies issue it whenever they pay out $10 or more from a pension, annuity, profit-sharing or retirement plan, IRA, or insurance contract. You receive a copy by January 31, and the IRS receives its own copy to match against your return.
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The payer, not you, prepares the form and decides which figures and codes to enter. Common issuers include IRA custodians such as brokerages, 401(k) and 403(b) plan administrators, governmental 457(b) plans, and annuity carriers. If you took distributions from more than one account, you can receive several separate forms in the same year (IRS Instructions for Forms 1099-R and 5498, 2026).
What do the boxes on Form 1099-R report?
The three boxes to read first are Box 1, Box 2a, and Box 7. Box 1 shows the gross distribution, Box 2a the portion that is taxable, and Box 7 the distribution code that classifies the payment. Box 4 reports federal income tax withheld, Box 5 shows after-tax basis or Roth contributions recovered, and the Box 2b checkboxes flag when the taxable amount is not determined.
| Box | What it reports |
|---|---|
| Box 1 | Gross distribution, the total amount paid out. |
| Box 2a | Taxable amount of the distribution. |
| Box 2b | Checkboxes for “taxable amount not determined” and “total distribution.” |
| Box 4 | Federal income tax withheld from the payment. |
| Box 5 | After-tax basis recovered (employee or designated Roth contributions, or insurance premiums). |
| Box 7 (Box 7a on the 2026 form) | Distribution code or codes that classify the payment. |
| Box 7b | IRA/SEP/SIMPLE checkbox on the 2026 form. |
What do the Box 7 distribution codes mean?
Box 7 holds a one or two character code that tells the IRS the type of distribution and how it should be taxed. The code drives whether the 10% early-withdrawal penalty applies, whether the payment was a rollover, and whether it followed a death or disability. A form can show two codes at once when more than one condition applies to the same distribution.
| Code | Meaning |
|---|---|
| 1 | Early distribution, no known exception (10% penalty generally applies). |
| 2 | Early distribution, exception applies (no penalty). |
| 3 | Disability. |
| 4 | Death (paid to a beneficiary). |
| 7 | Normal distribution (recipient is 59½ or older). |
| B | Distribution from a designated Roth account. |
| G | Direct rollover to a qualified plan, 403(b), governmental 457(b), or IRA. |
| J | Early distribution from a Roth IRA, no known exception. |
| Q | Qualified distribution from a Roth IRA. |
| T | Roth IRA distribution, exception applies. |
Code 7: normal distribution
Code 7 is the code many retirees see. It means a normal distribution taken at or after age 59½, so the 10% early-withdrawal penalty does not apply. The money is still taxed as ordinary income to the extent it comes from pre-tax dollars. Code 7 appears on routine pension payments, annuity income, and ordinary IRA or 401(k) withdrawals after 59½.
Code 1: early distribution, no known exception
Code 1 means an early distribution with no known exception. The recipient is under 59½ and the payer has no evidence that a penalty exception applies, so the 10% additional tax under Internal Revenue Code section 72(t) generally applies to the taxable amount. If an exception does fit your situation, you can claim it yourself on Form 5329 rather than relying on the payer’s code.
Code 2: early distribution, exception applies
Code 2 means an early distribution for which an exception applies. The recipient is under 59½, but the payer has identified a recognized exception to the 10% additional tax, so no penalty is due on the amount shown. Pre-tax dollars remain taxable as ordinary income. Code 2 is also the code a Roth conversion produces for a saver under 59½.
When you move pre-tax money from a traditional IRA or plan into a Roth, the distribution leg is an early distribution, but the conversion is an exception to the 10% penalty, so the custodian reports it with code 2. A conversion is uncapped, taxable as ordinary income, and irreversible, with a December 31 deadline for the tax year. You report the taxable conversion on Form 8606 and Form 1040. Our overview of the Roth conversion service explains the planning context, and our step by step on how to report a Roth conversion on taxes covers the Form 8606 entries.
Taxes withheld from a conversion while you are under 59½ can themselves trigger the penalty. Money withheld for taxes never reaches the Roth account, so the IRS treats those withheld dollars as an early distribution that was not converted. That portion loses the code 2 exception and can face the 10% additional tax on Form 5329. Many investors under 59½ pay the conversion tax from a separate taxable account instead of withholding, so the full converted amount lands in the Roth.
Conversions are not the only trigger. Payers also apply code 2 for several statutory exceptions that waive the 10% penalty for an under 59½ recipient (IRS Topic no. 558, 2025):
- IRS levy: the account was seized to satisfy a federal tax levy under section 6331.
- Governmental 457(b): distributions from a governmental deferred compensation plan are generally not subject to the 10% penalty.
- Age-55 separation: leaving an employer in or after the year you turn 55 (age 50 for qualified public safety workers) exempts plan distributions, though this rule does not apply to IRAs.
- 72(t) SEPP: a committed schedule of substantially equal periodic payments, which must generally continue for the longer of 5 years or until you reach 59½.
Code G: direct rollover, and code 4: death
Two other codes turn up often. Code G marks a direct rollover of a distribution to a qualified plan, a 403(b), a governmental 457(b), or an IRA, and it is generally not taxable in the year of the move. Code 4 marks a distribution paid to a beneficiary after the account owner’s death, which is exempt from the 10% early-withdrawal penalty but still taxable as ordinary income on pre-tax dollars.
Is a Form 1099-R distribution taxable?
It depends on the code and the source of the money. Distributions of pre-tax dollars from a traditional IRA, 401(k), 403(b), or 457(b) are taxed as ordinary income in the year paid. A Roth conversion is taxable on the pre-tax amount converted. After-tax basis shown in Box 5, direct rollovers coded G, and qualified Roth distributions coded Q generally escape tax. Read Box 2a for the taxable slice.
If Box 2b shows “Taxable amount not determined,” you calculate the taxable figure yourself, often on Form 8606 when basis or a conversion is involved. For someone weighing how a conversion lands inside a given bracket, our guide on how much to convert to Roth walks through the tradeoffs (IRS Publication 575, 2025).
Which codes can be combined in Box 7?
A single Form 1099-R can display two codes in Box 7 when more than one rule applies. Code 2, for example, is allowed with codes 8, B, D, K, L, M, and P. Each pairing narrows the account type or the timing of the distribution, which changes how the taxable amount or an excess contribution is handled on your return. The payer selects the valid combination.
| Combined code | What the pairing signals |
|---|---|
| 2, 8 | Excess contributions plus earnings that are taxable in the current year. |
| 2, B | Early distribution from a designated Roth account, exception applies. |
| 2, D | Payment from a nonqualified annuity that may be subject to the net investment income tax. |
| 2, K | Distribution of IRA assets with no readily available fair market value. |
| 2, L | Deemed distribution from a plan loan, exception applies. |
| 2, M | Qualified plan loan offset, exception applies. |
| 2, P | Excess contributions plus earnings that are taxable in the prior year. |
How do you report a Form 1099-R on your tax return?
You transfer the figures from the form onto Form 1040. The gross amount in Box 1 goes on the pension or IRA line, and the taxable amount in Box 2a goes on the taxable line beside it. A Roth conversion is reported on Form 8606. You attach Form 5329 only when you owe the 10% penalty or a recapture, or to claim an exception the payer did not code. Follow the steps below.
- Enter the Box 1 gross amount on Form 1040 line 4a (IRA) or line 5a (pension, annuity, or 457(b)).
- Enter the Box 2a taxable amount on line 4b or 5b, after any basis or conversion adjustment you calculate.
- Report a conversion on Form 8606, Part II, to track basis and the taxable amount.
- File Form 5329 only if you owe the 10% penalty, a recapture, or to claim an exception the payer did not code.
One situation brings Form 5329 back. If you withdraw converted principal within 5 years of the conversion while still under 59½, the 10% additional tax can be recaptured on Form 5329, even though the original conversion carried code 2. Each conversion has its own 5-year clock for this recapture rule, which is separate from the 5-year clock that governs tax-free Roth earnings (IRS Form 1040 Instructions, 2025).
Where did the boxes move on the 2026 Form 1099-R?
The 2026 Form 1099-R renumbers several boxes. The distribution code moved from Box 7 to Box 7a, and the IRA/SEP/SIMPLE checkbox moved to Box 7b, with new boxes 7c and 7d added (IRS 2026 Instructions for Forms 1099-R and 5498). A code you find on a 2026 form appears in Box 7a, while forms issued for 2024 and earlier keep the single Box 7.
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Frequently asked questions
What is Form 1099-R used for?
Form 1099-R reports distributions of $10 or more from pensions, annuities, profit-sharing and retirement plans, IRAs, and insurance contracts. Payers such as custodians, plan administrators, and insurers send one copy to you and one to the IRS. Box 1 shows the gross amount, Box 2a the taxable amount, and Box 7 the distribution code that classifies the payment (IRS Instructions for Forms 1099-R and 5498, 2026).
Who sends you a Form 1099-R?
The payer sends it, not you. That is usually the IRA custodian, the 401(k), 403(b), or governmental 457(b) plan administrator, or the annuity or insurance carrier that made the payment. You should receive your copy by January 31 of the year after the distribution, and the IRS receives a matching copy (IRS Instructions for Forms 1099-R and 5498, 2026).
Is money reported on a 1099-R taxable?
Usually the pre-tax portion is. Distributions from a traditional IRA, 401(k), 403(b), or 457(b), and the pre-tax amount of a Roth conversion, are taxed as ordinary income in the distribution year. After-tax basis in Box 5, direct rollovers coded G, and qualified Roth distributions coded Q generally are not taxed. Read Box 2a for the taxable amount (IRS Publication 575, 2025).
What do the distribution codes in Box 7 mean?
Box 7 holds a one or two character code that classifies the distribution. Common codes include 7 for a normal distribution at or after 59½, 1 for an early distribution with no exception, 2 for an early distribution with an exception, 4 for a death benefit, and G for a direct rollover (IRS Instructions for Forms 1099-R and 5498, 2026).
What does distribution code 2 mean on a 1099-R?
Code 2 means early distribution, exception applies. The recipient is under 59½, but the payer has identified an exception to the 10% additional tax, so no penalty is due on the amount shown. The distribution is still generally taxable as ordinary income when it comes from pre-tax dollars, and a Roth conversion under 59½ is coded 2 (IRS Instructions for Forms 1099-R and 5498, 2026).
Do I need to file Form 5329 if my 1099-R shows code 2?
Usually not. Because code 2 already reflects an exception to the 10% penalty, most taxpayers report the amount on Form 1040 without Form 5329. You may still need Form 5329 to report recaptured tax on converted principal withdrawn within 5 years while under 59½, or on amounts withheld from a conversion that were not converted (IRS Topic no. 557, 2025).
Where is the distribution code on the 2026 Form 1099-R?
On the 2026 Form 1099-R, the distribution code moved from Box 7 to Box 7a, and the IRA/SEP/SIMPLE checkbox moved to Box 7b, with new boxes 7c and 7d added. Forms issued for 2024 and earlier keep the single Box 7 (IRS 2026 Instructions for Forms 1099-R and 5498).
