IRS Levy

[Brenda Wren]

Benefits that are paid direct to IRS in response to a levy, are they reportable on 1099-R?

[pmacduff]

others can weigh in, but I believe they are reportable - just not subject to the 10% excise tax if the participant is under 59 1/2. Still subject to ordinary income tax because that was never paid on these funds.

[Appleby]

others can weigh in, but I believe they are reportable - just not subject to the 10% excise tax if the participant is under 59 1/2. Still subject to ordinary income tax because that was never paid on these funds.

You are right.

Yes. 1099-R must be issued.

If the participant is under age 59 1/2 when the amount is distributed from the account, code 2 must be used in box 7 of 1099-R to show that the 10% early distribution penalty does not apply