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rwilson79
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

I thought my retirement was a normal distribution, which is code 7.
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ChristinaS
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

Its not "normal" because you are not 59 1/2. Normal simply means 59 1/2.

However, Box 2 means you are not paying the 10% penalty either way. So, you are not penalized for not being 59 1/2 regardless. A "7' wouldn't be any better than a "2".

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6 Replies
ChristinaS
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

Its not "normal" because you are not 59 1/2. Normal simply means 59 1/2.

However, Box 2 means you are not paying the 10% penalty either way. So, you are not penalized for not being 59 1/2 regardless. A "7' wouldn't be any better than a "2".

View solution in original post

ChristinaS
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

Because you separated from service at 55, you are not penalized for not being 59 1/2. This meets the following 10% penalty exception:
Qualified retirement plan distributions you receive after separation from service when the separation from service occurs in or after the year you reach age 55 (age 50 for qualified public safety employees).
<a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i5329/ch02.html">https://www.irs.gov/instructions/i5329/ch02.html</...>
rwilson79
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

Thank you.
ChristinaS
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

No problem!
bamagolfers2
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

Question to both of you guys...I have the same issue but how do I get the s/w to not add 10%?  Fill out 5329?
oakie123
New Member

Code 2 is in box 7 of my 1099-R. What does "early distribution, exception applies" mean in the code explanation? I was 55 when I retired.

Can you define "separation from service "? Is being laid off from an employer considered "separation from service "?

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