A code W Form 1099-R reports amounts that are explicitly excludible from income under Section 72(e)(11) of the tax code. Since this distribution is not taxable, there is no penalty. Section 72(e)(11) of the tax code also treats the distribution from the annuity as a nontaxable distribution of basis (to the extent of the basis in the annuity).
If the code W Form 1099-R reports a taxable amount in box 2a, contact the payer to obtain a corrected Form 1099-R.
