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New Member
posted Jun 6, 2019 12:29:06 PM

Does the code 3 on 1099-r mean that the distribut. of 5700. would be non taxable to a disabled person ?

0 3 19084
1 Best answer
Employee Tax Expert
Jun 6, 2019 12:29:07 PM

No, box 7 code 3 does not mean it is a non taxable distribution.

If you take a retirement distribution because of disability, the distribution is taxed as wages until you reach the minimum retirement age. 

Distributions from an IRA or a pension plan to a taxpayer that has been made due to their Disability is fully taxable to the taxpayer unless the owner had made non-deductible contributions to the IRA or other non-deductible contributions to a pension plan. However, such a distribution is not subject to the 10% early withdrawal penalty, regardless of the age of the taxpayer.

Retirement age is the earliest age you are eligible to receive a pension or annuity from your employer, if you had not been disabled. Most often that is age is 55, but it can vary from one company to another.

3 Replies
Employee Tax Expert
Jun 6, 2019 12:29:07 PM

No, box 7 code 3 does not mean it is a non taxable distribution.

If you take a retirement distribution because of disability, the distribution is taxed as wages until you reach the minimum retirement age. 

Distributions from an IRA or a pension plan to a taxpayer that has been made due to their Disability is fully taxable to the taxpayer unless the owner had made non-deductible contributions to the IRA or other non-deductible contributions to a pension plan. However, such a distribution is not subject to the 10% early withdrawal penalty, regardless of the age of the taxpayer.

Retirement age is the earliest age you are eligible to receive a pension or annuity from your employer, if you had not been disabled. Most often that is age is 55, but it can vary from one company to another.

New Member
May 26, 2023 12:52:32 PM

Are distributions from an employer funded pension plan, with code 3 in box 7, taxable after retirement age?

Level 15
May 26, 2023 12:56:02 PM

Yes, both before and after retirement age.  It's just before retirement age it gets counted as Wages so you can get EIC credit for it.