1099R distribution code(s) for In-plan Pre-tax to Roth conversion

[KaJay]

Background: 403(b)(9) non-electing church plan, participant wants to convert his pre-tax money ($10K) to a designated Roth account within the same plan.

The plan is getting hung up on "conversion" vs "rollover" when there is no distributable event. I only seem to see the term "in-plan Roth rollover (IRR)" these days, and information I see about "Roth conversions" is generally associated with an IRA to Roth IRA. The 1099R instructions state: An IRR is a rollover within a retirement plan to a designated Roth account in the same plan. Yet, there is no plan consensus. 😕

Three scenarios:

A - Participant is under age 59.5, still employed and contributing.

B - Participant is under age 59.5 and severed from employment.

C - Participant is over age 59.5.

It is agreed that box 2a would be 10K, but there is disagreement as to how this transaction is to be reported in box 7 on 1099R and I am hoping someone could offer clarity (TIA). 

What is the appropriate code(s) for box 7 and is it the same in all three "in-plan" scenarios? 

 

[Madison71]

I would think A and B would be Code 1 and C would be Code 7

[Artie M]

A--Code 2 (Early distribution, exception applies), G (Direct Rollover)

B--Code 2 (Early distribution, exception applies), G (Direct Rollover)

C--Code 7 (Normal distribution), G (Direct Rollover)

Box 1--$10,000
Box 2a--$10,000
Box 4--$0

[Madison71]

....Artie beat me to editing my response after thinking about it to add the G. I'm blaming it on being late Friday afternoon and March Madness....although I would have still been wrong, because I wasn't going to change the Code 1 from A and B. Sorry

[KaJay]

On 3/20/2026 at 3:46 PM, Artie M said:

A--Code 2 (Early distribution, exception applies), G (Direct Rollover)

B--Code 2 (Early distribution, exception applies), G (Direct Rollover)

C--Code 7 (Normal distribution), G (Direct Rollover)

Box 1--$10,000
Box 2a--$10,000
Box 4--$0

Maybe I am misunderstanding, but it seems you are both stating that Scenarios A & B would have "2G" in box 7 as the distribution code. Am I understanding that correctly?
I have never seen a numerical code paired with the direct rollover code (G). Also, it is not included as a "used with" code on the Form 1099R instructions, Table 1. Guide to Distribution Codes. Isn't a code of G already indicative of no early withdrawal penalty? 

[Nichol C]

My understanding is this would be Code G only.

The Form 1099-R instructions say to use Code G for a direct rollover to a designated Roth account, including in-plan Roth rollovers (IRRs). I’m not seeing anything in the instructions that allows Code 2 to be used with G, and it’s not listed as a valid combination in Table 1.

Also, the attached IRS In-Plan Roth Rollover Phone Forum transcript (page 13, paragraph 2), while a bit older and from when these rules were first introduced, indicates reporting the amount in Box 1 and 2a with Code G, without mentioning any additional distribution codes.

It seems like Code G already communicates that this is a direct rollover and not subject to the 10% early distribution penalty, so adding Code 2 doesn’t appear necessary or supported by the instructions.

Happy to be corrected if there’s specific IRS guidance that allows 2G here, but I haven’t come across anything that does.

inplan_roth_phoneforum_transcript.pdf

[KaJay]

Ok. That is my understanding as well @Nichol C.

And yes, please chime in if we are missing something here!

Thanks everyone.