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New Member
posted Jun 4, 2019 12:27:29 PM

Is a 1099-R the correct form to receive from a payer for distributions from a 457(b) plan?

I know distributions from a deferred compensation plan are taxed as regular income, but on my tax prep it appears these distributions are being exempted. The distribution code in box 7 on the 1099-R I received from the payer is "7", which I believe is incorrect for this distribution.

Should I have received a W2 from this payer? I have had this deferred compensation plan for over 20 years.

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1 Best answer
Level 15
Jun 4, 2019 12:27:31 PM

A 1099R is correct for a distribution from a 457(b) Plan.

A code of 7 is a normal distribution. Which if you are retired and/or over 59 1/2 is correct code.

You may want to EDIT the 1099R and go through the questions again that follow the 1099R if it not being taxed to you.

The 457 plan is a type of non-qualified, tax advantaged deferred-compensation retirement plan that is available for governmental and certain non-governmental employers in the United States. The employer provides the plan and the employee defers compensation into it on a pre-tax or after-tax (Roth) basis.


4 Replies
Level 15
Jun 4, 2019 12:27:31 PM

A 1099R is correct for a distribution from a 457(b) Plan.

A code of 7 is a normal distribution. Which if you are retired and/or over 59 1/2 is correct code.

You may want to EDIT the 1099R and go through the questions again that follow the 1099R if it not being taxed to you.

The 457 plan is a type of non-qualified, tax advantaged deferred-compensation retirement plan that is available for governmental and certain non-governmental employers in the United States. The employer provides the plan and the employee defers compensation into it on a pre-tax or after-tax (Roth) basis.


Level 1
Jan 20, 2020 2:42:41 PM

One important point,  the non governmental 457b should issue a  W-2.  Governmental issues a 1099-R

New Member
Mar 28, 2020 3:02:13 PM

Fidelity placed a '2' instead of a '7' in box 7 of my 1099-R for the distribution from my 457. Should I ask Fidelity to re-issue the 1099-R with the correct code on the form sent to the IRS, or should I put 7 instead of 2,on my tax form or should I place a 2 on my tax form, even though it isn't correct? Thanks.

Expert Alumni
Mar 29, 2020 11:53:05 AM

A "2" represents an Early  Withdrawal.  Are you 59 1/2?  It also indicates that an exception does apply.  This is taxable income, but the question is, did you fall victim to the 10% penalty.

 

You can find this on schedule 2 line 6.  If line 6 is blanki, you're good to go.  If there is an amount on line 6, please go back through the questions to confirm your answers.