Proper 1099R Box 7 distribution code following death of retiree

[Guest Luke Bailey]

All cases involve a governmental 401(a) pension plan/statute. I'm surprised that the 1099R instructions seem to be ambiguous on the treatment of the following situations:

Case 1: Participant retired, in pay status, over 59-1/2, receiving payments under a 100% J&S, properly coded for prior years in Box 7 of Form 1099R with a "7" for normal distributions. Participant dies. Should distributions to widow continue to be coded "7" because they just continue as normal distributions under the J&S, or should they be coded "4" because they are paid to the widow now on account of the retiree's death?

Case 2: Same as Case 1, except the payment to the surviving spouse is under a separate plan/statutory provision that styles the continuing payments to the spouse as a "death benefit" rather than as a J&S?

Case 3: Same as Case 2, except the death benefit provision in the plan/statute provides that while there are minor children of the deceased participant living, only 50% of the monthly amount formerly payable to the retiree is paid to the surviving spouse, and the remaining 50% is shared among the minor children until they age out of minority. Then the surviving spouse's annuity is bumped back up to 100%?

Cases 4, 5, and 6: Same as Cases 1, 2, and 3 above, except that before the retiree's death, he or she was in pay status on account of disability and the payments while the retiree was alive were properly coded "3" in Box 7?

[Appleby]

In all cases, the code in Box-7 would be ‘4’. Code –4 must be used when distributions are paid to the beneficiary

[Guest Luke Bailey]

I'm happy with this answer, and have no basis to believe it's incorrect, but for the record, can you provide any authority or other basis for this conclusion?

By the way, thanks for the answer and for moderating this helpful forum.

[Appleby]

You’re welcome Luke…and Thanks for the feedback.

By process of elimination, we use Code 4 as none of the others seem to apply, since all payments (after the death of the participant) will be made to the beneficiary.

As you know, the instructions for Code 4 for Box-7 states “Use Code 4 regardless of the age of the employee/taxpayer 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.”

In your opinion, what other Code do you think could apply, instead of Code 4?

Hyperlink IRS publication 1220 Instructions for filing 1099-R, 5498 Etc.

[Guest Luke Bailey]

We're thinking along the same lines and looking at the same sources, but I think my only difficulty was calling the survivor portion of a J&S a payment to a "beneficiary." That's all. Certainly could be viewed that way, but also not that way. This probably has not come in for much scrutiny because it won't affect the tax treatment. Thanks again.