@Critter-3 - actually, Code T means
1) the issuer knows the owner is over 59.5 years old but
2) the issuer does not know that ANY Roth account was opened for 5 years.
https://www.irs.gov/pub/irs-pdf/i1099r.pdf
see page 17.
it is possible part of the distribution is taxable, which is why Code T is used).
If the issuer knew for sure it was not taxable, Code Q would be used. That would mean the issuer not only knows the owner is over 59.5 years but also knows the Roth was open for 5 calendar years. for the payment to be totally tax free, the owner of the Roth needed to be over 59.5 years old and ANY Roth account held by the owner needed to be opened for 5 calendar years.
Most likely the entire payment is NOT taxable because how the IRS establishes the order of distribution.
a) all contributions dollars are presumed to be distributed first (not taxable)
b) all conversion dollars are presumed to be distribured 2nd (not taxable)
c) all earnings are presumed to be distributed last. (only taxable if any Roth was opened for less than 5 calendar years)
there is no 10% penalty for any of this because the owner was over 59.5 years old.
So unless this is a total liquidation, it is most likely the entire distribution is not taxable, but it is worth a call to the issuer(s) to determine if any one Roth had been opened for at least 5 calendar years.
