1099-R the box for IRA/SEP/SIMPLE could result in a 25% penalty, but my employer has more than 100 employees & I participated more than 2 years. Why would it be checked?

[dmertz]

The IRA/SEP/SIMPLE box indicates that the distribution is from a traditional IRA, which includes SEP and SIMPLE IRA accounts.

A 25% penalty results when the code in box 7 is S (for an early distribution from a SIMPLE IRA in the first 2 years) and you are not eligible for any type of exception to an early distribution from a IRA.  The 2-year clock for determining if box 7 should have code S or instead have code 1 is the date on which the first contribution was made to the SIMPLE IRA account.  If the first contribution was made to the SIMPLE IRA account more than 2-years prior to the date that you received the distribution, the code should be 1, not S.  If your Form 1099-R is incorrect, the plan must correct it.