If you’ve received Form 1099-R, it means money came out of your 401(k) or IRA. Box 7 of the form contains one or two distribution codes, which provides certain information to the IRS. The 1099-R code(s) will vary based on factors such as the source of the assets being distributed, where the assets are going to, your age, and the taxable nature of the distribution. Often your 1099-R will have two different codes.
Note that if you have more than one distribution in a year with different codes you will receive more than one 1099-R. However, if you have more than one distribution in a year with the same codes, they will be combined onto a single 1099-R.
Use this guide to decode each distribution code and see what it says about the distribution.
401(k)
Standard distributions from your 401(k) plan
There are several different times you can request a distribution from your 401(k) plan such as when you turn 59 ½, when you have a financial hardship, or when you no longer work for the employer sponsoring the plan.
Code | Meaning |
1 | Used when you take a cash distribution before age 59 ½ and your provider has not verified if a penalty exemption applies. If you qualify for any exemption you will need to claim the exemption on your tax return. |
2 | Used when you take a cash distribution before age 59 ½ and your provider has verified that a penalty exemption applies. If you qualify for any exemption and a Code 2 has been used, you will need to claim the exemption on your tax return. |
4 | Used when your beneficiary takes a cash distribution after you have died. |
7 | Used when you take a cash distribution and are 59 ½ or older and are exempt from the early withdrawal penalty tax. |
B | Used when the assets are coming from a Roth source under the plan. This code is always used in conjunction with another code. |
G | Used when you are directly rolling over your 401(k) assets to an eligible retirement plan such as another 401(k) plan or an IRA, except when rolling over Roth 401(k) assets to a Roth IRA. |
H | Used when you are directly rolling over your Roth 401(k) assets to a Roth IRA. |
Examples of standard distribution codes:
You are 45 years old, no longer working for the employer sponsoring the plan, and take a full cash distribution of your 401(k) assets in cash.
Non-Roth assets - Code 1
Roth assets - Codes 1,B
You are 62 years old, still working for the employer sponsoring the plan, and take a cash distribution of your 401(k) assets in cash.
Non-Roth assets - Code 7
Roth assets - Codes 7,B
You are 45 years old, no longer working or the employer sponsoring the plan, and rollover all of your assets to your new 401(k) plan.
All assets - Code G
You are 45 years old, no longer working for the employer sponsoring the plan, and roll all of your assets to IRAs.
Non-Roth assets - Code G
Roth assets - Code H
Corrective distributions from your 401(k) plan
Sometimes money will be distributed to you to fix an issue that has arisen under the plan. This can include compliance refunds and corrective distributions to fix a plan issue. While some of the codes listed above are also used, there is one code specific to corrective distributions that are not excess employee deferrals.
General corrective distributions include any corrective distribution not related to loans or excess employee deferrals.
Code | Meaning |
E | Used for distributions related to distributions needed to fix an issue with the plan. This includes certain testing related distributions. While includable in income for the year, distributions using code E are exempt from any early withdrawal penalties. Distributions with a code E are not eligible for rollover to an eligible retirement plan. |
Example of corrective distribution codes:
Your plan failed its annual compliance testing and some of your employee deferrals are being returned to you.
Non-Roth assets - Code E
Roth assets - Codes E,B
Your plan inadvertently withheld deferrals at a rate higher than you had elected and is returning the overage to you.
Non-Roth assets - Code E
Roth assets - Codes E,B
Corrective distributions related to excess employee deferral
Code | Meaning |
8 | Used when the excess employee deferral is refunded during the same year. While includable in income for the year, distributions using code E are exempt from any early withdrawal penalties. Distributions with a code 8 are not eligible for rollover to an eligible retirement plan. |
E | Used when the excess employee deferral is refunded after April 15 of the following year (when permitted). While includable in income for the year, distributions using code E are exempt from any early withdrawal penalties. Distributions with a code E are not eligible for rollover to an eligible retirement plan. |
P | Used when the excess employee deferral is refunded in the year following the year of deferral but before April 15. While includable in income for the year, distributions using code E are exempt from any early withdrawal penalties. Distributions with a code P are not eligible for rollover to an eligible retirement plan. |
Corrective distributions related to loans
Code | Meaning |
E | Used when you have made excess loan payments and the excess needs to be refunded to you. While includable in income for the year, distributions using code E are exempt from any early withdrawal penalties. Distributions with a code E are not eligible for rollover to an eligible retirement plan. |
L | Used when your loan has failed to meet the terms of the loan (e.g., missed payments or the loan not completely repaid by the end of the loan term) and is being deemed distributed. Distributions with a code L are both includable in income and subject to the early withdrawal penalties unless an exemption applies. Distributions with a code L are not eligible for rollover to an eligible retirement plan. |
M | Used when your loan has been offset and that offset is a qualified plan loan offset. Distributions with a code M are both includable in income and subject to the early withdrawal penalties unless an exemption applies. Distributions with a code M are eligible for rollover to an eligible retirement plan. |
IRA
Standard distributions from your traditional IRA account
Code | Meaning |
1 | Used when you take a cash distribution before age 59 ½ and your provider has not verified if a penalty exemption applies. If you qualify for any exemption you will need to claim the exemption on your tax return. |
4 | Used when your beneficiary takes a cash distribution after you have died. |
7 | Used when you take a cash distribution and are 59 ½ or older and are exempt from the early withdrawal penalties tax. |
G | Used when you are rolling over your IRA assets to an eligible retirement plan such as a 401(k) plan. Transfers from an IRA to another IRA are not reported on a 1099-R. |
Standard distributions from your Roth IRA account
Code | Meaning |
J | Used when you take a cash distribution, are under age 59 ½, still alive, and your provider cannot verify that you have met the five-year waiting period for a qualified distribution. This means the earnings may be subject to taxation and the early withdrawal penalty tax may apply. If you have met the five year requirement and/or qualify for any exemption you will need to claim the exemption on your tax return. |
Q | Used when you take a cash distribution, are age 59 ½ or older, or have died, and your provider can verify that you have met the five-year waiting period for a qualified distribution. This means the earnings are not subject to taxation and the early withdrawal penalty tax will not apply. |
T | Used when you take a cash distribution, are age 59 ½ or older, or have died, and your provider cannot verify that you have met the five-year waiting period for a qualified distribution. This means the earnings may be subject to taxation and the early withdrawal penalty tax will not apply. If you have met the five-year requirement, you will need to claim the exemption on your tax return. |
Other distributions from your IRA account
Code | Meaning |
5 | Used when assets are distributed from an IRA due to a prohibited transaction. |
N | Used when an IRA contribution is recharacterized in the year following the year for which it was contributed. |
R | Used when an IRA contribution is recharacterized in the same year for which it was contributed. |
Form 1099-R codes can directly affect your tax return, especially if penalties or exceptions apply.
If you’re unsure how your distribution is taxed, we recommend consulting with a licensed qualified tax professional or financial advisor. Information on Form 1099-R can also be found on the IRS webpage at About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
This information is general in nature and is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances. You are advised to consult a qualified financial adviser or tax professional before relying on the information provided herein.