I received a 1099-R for a 401k distribution due to the plan's failing nondiscrimination testing. Box 7 has code 8. Is this distribution subject to the additional 10% tax?

[dmertz · Accepted solution]

Distributions due to filing nondiscrimination testing are not subject to the 10% additional tax (early-distribution penalty).  If box 7 does not include a code 1, TurboTax will not treat it as being subject to the 10% additional tax.

[1215Michigan]

Company 401(k) failed 2019 discrimination test and refunded amounts in 2020.

1099R Box 7 has code 8.   TT shows it as nontaxable.  My administrator tells me it is

[1215Michigan]

But TT is treating the entire distribution as non-taxable

[macuser_22]

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@1215Michigan wrote:

But TT is treating the entire distribution as non-taxable

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The taxable amount in box 2a would be subject to tax.