Code B was used in Box 7 on my Form 1099-R. My distribution is based on a Roth account. Why does TurboTax says it is invalid when entered.

[postalidol1228]

This from a Thrift Savings Plan

[TomK2023]

The reason TurboTax may be flagging Code B as "invalid" may be because Code B is specifically for a Designated Roth Account (like a Roth 401k or Roth 403b), but it usually cannot stand alone in Box 7 (if you are under age 59 1/2 or if other conditions apply).

Code B identifies the type of account, but the IRS also wants to know the status of the distribution.  Most 1099-Rs for Roth accounts will have a second character in Box 7.

Example Codes:

• Code 1B: Early distribution from a Roth plan (no known exception)
• Code 7B: Normal distribution from a Roth plan (you are over 59 1/2)
• Code HB: Death/Disability/Hardship from a Roth plan.

Double-check your physical form... Look very closely at Box 7.   Is there a tiny number "1" or "7" next to or above the "B"? Sometimes they are printed closely together (e.g., "B1" or "1B").

If you rolled over your Roth 401k directly to a Roth IRA, your provider might have only put "B."  However, the program wants to know if the distribution was "qualified" or "early."

If your form truly only has a "B" and nothing else, your financial institution may have made a clerical error.

Note: If your form definitely only has "B," try entering it as "1B" (if you're under 59 1/2) or "7B" (if you're over 59 1/2) to see if the subsequent questions in TurboTax allow you to clarify that it was a rollover or a qualified distribution.

[dmertz]

TurboTax would say it's invalid if you mistakenly marked the IRA/SEP/SIMPLE box or, if TurboTax asked, you told TurboTax that this distribution was from a Roth IRA.  The federal TSP is not an IRA.

There is no such code as HB (sounds like something AI would generate).  Cdes H and B are not permitted to be combined.  Code H reports a direct rollover from a designated Roth account to a Roth IRA (not what happened here).  Code B indicates a distribution from a designated Roth account in an employer plan (the federal TSP in this case).

You could have codes 2 and B together depending on your age when you left service this this employer and your age when the distribution occurred.  If the Form 1099-R has codes 2 and B, TurboTax inappropriately asks if the distribution was from a Roth IRA.  The code B present in box 7 unequivocally indicates that the distribution was not from a Roth IRA.