Form 1099-R

[dgurro]

Hello.  I receive a 1099-R with Distribution Code U.  This is for Quarterly Dividends payments received from my Company ESOP plan.  I have two questions:

TurboTax is asking if I was 59-1/2 when I received the money?  I turned 59 in November 2019, so in May 2020, I would have been 59-1/2.  Do I have to answer NO I was not 59-1/2 when I received the money since I received the first quarterly dividend in March 2020? 

I'm just wondering... I turned 60 in November 2020.  Will I receive a 1099-DIV instead of a 1099-R in Year 2021?

Thank you.

[ToddL99]

Your answer to the "Were you 59-1/2?"  question won't affect how the distribution is taxed. Cash dividend distributions made by an ESOP are not subject to the 10% penalty for early distribution.

Technically, if the entire amount reported on the Form 1099-R was paid in March 2020, you would NOT have been 59-1/2  years at the time you received it.  The 59-1/2 year rule for retirement plan distributions, however,  is only used to determine if an early-distribution penalty applies; as stated earlier, cash dividend distributions made by an ESOP are not subject to a penalty for early distribution.

As long as the ESOP  ("the Plan") pays the cash dividends, you will receive a  Form 1099-R. If the company pays the cash dividends directly to you (not through the ESOP), then you will receive a Form 1099-DIV (per IRS Announcement 2008-56).

Reporting Requirements for Section 404(k) Dividends from ESOPs

[dgurro]

Todd.... Thank you so much for your response.  This really helps!

dgurro

[dmertz]

The answer to the age question is irrelevant to a code U distribution since code U distributions are never subject to an early-distribution penalty.

[dgurro]

Thank you so much for your response.