1099-R Distribution Code in Box 7

[Guest mrnardoz]

Recipient under age 59 1/2 is getting a monthly annuity. Distribution code 2 is being used in box 7 of 1099-R.

After receipient reaches 59 1/2, should the distribution code change from a 2 to a 7?

Thanks

[SoCalActuary]

Seems reasonable, but you should confirm that 7 is for normal retirement. Does plan have 59 1/2 normal retirement? If not, you are probably stil ok to use 7, but it just doesn't match the literal reading of the rules.

[WDIK]

A literal reading of the Code 7 definition found in the 1099-R instructions does not refer to normal retirement, only a normal distribution.

Use Code 7: (a) for a normal distribution from a plan, including a traditional IRA, if the employee/taxpayer is at least age 591/2, (b) for a Roth IRA conversion or reconversion if the participant is at least age 591/2, and © to report a distribution from a life insurance, annuity, or endowment contract and for reporting income from a failed life insurance contract under sections 7702(g) and (h). See Rev. Rul. 91-17, 1991-1 C.B. 190. Use Code 7 with Code A, if applicable. Generally, use Code 7 if no other code applies. Do not use Code 7 for a Roth IRA distribution.

[Mary Kay Foss]

Most custodians issue two 1099Rs in the year that age 59-1/2 is reached so they can code them properly.

[Guest mrnardoz]

Mary Kay,

Do you mean that in that year they issue one 1099R with a code 2 and another 1099R with a code 7? If so, do they continue using code 7 in future years?

Many thanks!

[Appleby]

Yes. to both questions