My 1099-R for my Roth IRA distribution shows the code " T " in box 7. What gives?

[DDollar]

A code T in box 7 of 1099-R is for a Roth IRA distribution, when an exception applies.  It is used for a distribution from a Roth IRA if the IRA custodian does not know if the 5-year holding period has been met but:

• The participant has reached age 59 & 1/2
• The participant died, or
• The participant is disabled.

Whatever the reason, the distribution is not taxable nor subject to penalty.

[dmertz]

Although not subject to penalty, it's entirely possible that some or all of the distribution is taxable.  Be sure to click the Continue button on the Your 1099-R Entries page and answer the follow-up questions to allow TurboTax to calculate the taxable amount of this distribution.

[aloysius]

I found your reply on the right track, but incomplete.

My 1099-R has box 7 marked with T and it is a Roth distribution, that respects the qualified distributions rules, but once I enter it into Turbotax it shows up as taxable in form 1040 4.b.

Should I NOT enter the amount indicated in the 1099-R? Or what should I do, please?

Thanks a lot

[Buckeyedavid]

This would be really helpful as I am running into the same issue and the investment company is claiming this should be tax free.

[dmertz]

Many financial institutions, perhaps most, use code T for those over age 59½ even though you have met the 5-year requirement to make the Roth IRA distribution a qualified distribution, requiring you yourself to assert that you have met that requirement.  In TurboTax you simply indicate that you opened your first Roth more than 4 years prior to the beginning of the year in which you received the Roth IRA distribution (prior to 2015 with respect to a 2019 Roth IRA distribution).  TurboTax asks this question after you click the Continue button on the Your 1099-R Entries page.

[HappyCamper13]

I am having the same issue!  Is there a fix in the works?  Definitely should not be taxable!

[ReneeM7122]

You are correct.  As your distribution is not taxable, Code T in the 1099-R for a Roth IRA distribution means that there is an exception.   

What do all the codes in Box 7 of the 1099-R mean?

The code(s) in Box 7 of your 1099-R helps identify the type of distribution you received. We use these codes and your answers to some interview questions to determine if your distribution is taxable or subject to an early withdrawal penalty.

• 1 – Early distribution (except Roth), no known exception
• 2 – Early distribution (except Roth), exception applies
• 3 – Disability
• 4 – Death
• 5 – Prohibited transaction
• 6 – Section 1035 tax-free exchange
• 7 – Normal distribution
• 8 – Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2020
• 9 – Cost of current life insurance protection
• A – May be eligible for 10-year tax option (Form 4972)
• B – Designated Roth account distribution
• C – Reportable death benefits under section 6050Y
• D – Annuity payments from nonqualified annuities and distributions from life insurance contracts that may be subject to section 1411 taxes
• E – Distributions under Employee Plans Compliance Resolution System (EPCRS)
• F – Charitable gift annuity
• G – Direct rollover of a distribution to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA
• H – Direct rollover of a designated Roth account distribution to a Roth IRA
• J – Early distribution from a Roth IRA, no known exception
• K – Distribution of IRA assets not having a readily available fair market value (FMV)
• L – Loans treated as deemed distributions under section 72(p)
• M – Qualified plan loan offset
• N – Recharacterized IRA contribution made for 2020 and recharacterized in 2020
• P – Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2019
• Q – Qualified distribution from a Roth IRA
• R –Recharacterized IRA contribution made for 2019 and recharacterized in 2020
• S – Early distribution from a SIMPLE IRA in the first 2 years, no known exception
• T – Roth IRA distribution, exception applies
• U – Dividend distribution from ESOP under sec 404(k)
• W – Charges/payments for purchasing qualified long-term care insurance contracts under combined arrangements

Enter the information on your 1099-R as it appears. If you have concerns about the accuracy of the information, contact the payer listed on the form to issue a corrected 1099-R, if necessary.

@HappyCamper13

[dmertz]

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As your distribution is not taxable, Code T in the 1099-R for a Roth IRA distribution means that there is an exception. 

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That's an inaccurate statement.  Code T means that any portion of the distribution that is taxable is not subject to penalty.

[griffeat]

My 1099-R from Morgan Stanley has distribution code T (Roth), but Turbo Tax 2020 is treating the distribution as taxable???

[RobertB4444]

Code T means that Morgan Stanley didn't know if the Roth IRA had been held for 5 years yet in which case it qualifies for tax free treatment.  You need to tell TurboTax you had the account for more than five years when it asks or you can get Morgan Stanley to issue you a corrected 1099-R with code Q.  Or it may be taxable.

[semyonr]

How we need report in your Turbo Tax? I use Turbo Tax 2021 and 1099-R Gross Distribution accumulate in the Adjusted Gross income. Why? And how we need include these 4 1099-R forms in the Turbo Tax 2021?

[semyonr]

I asked the same question. Maybe need ignore these 1099-R? Can some professional from Turbo Tax answer?

[macuser_22]

Yes 1099-R's must be entered.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

[t231]

Same issue with the 1099R. Mine is a NON-spousal inherited ROTH IRA and the bank refuses to change the code from “T” even though the ROTH was open over 5yrs while the acct holder was alive.

Will TurboTax ask follow-up questions so that the distribution is not taxable? 

Will the FREE version cover this scenario? If not, which version does?