topic 1099 R in Get your taxes done using TurboTax

1099 R

Cmkayser21 — Mon, 10 Feb 2020 16:08:25 GMT

On 1099R Goss Distribution is the same amount as Taxable amount, federal tax amount is 10% of Gross amount, line 7 has code 3. Once entered into TurboTax the system still shows an additional Federal Tax due is 10% of total from Gross Distribution + Taxable Amount. First question shouldn't code T be used since the person is totally disabled & had the IRA for over 5 years? Second question is Federal Tax was already paid why is an additional 10% being applied to both Gross and Distribution amount? Please help.

Re: 1099 R

JosephF8 — Mon, 10 Feb 2020 16:33:55 GMT

Code T is for Roth IRA's. Was this a Roth? Unless it is a Roth Code 3 is appropriate.

In the interview after entering the 1099-R there are follow up questions to determine if the penalty applies.

To get back there:

To Edit a 1099-R in TurboTax

Open (continue) return if you don't already have it open.
Inside TurboTax, search for 1099-R and select the Jump to link in the search results.
Answer Yes on the Your 1099-R screen, then select Continue.
When you land on the Your 1099-R Entries screen select Edit (or the pencil icon) next to the 1099-R you need to work on.
Scroll to the bottom of the page and select Continue.

Continue through the interview until you get to the penalty exception pages.

Re: 1099 R

macuser_22 — Mon, 10 Feb 2020 16:54:38 GMT

@Cmkayser21 wrote:

On 1099R Goss Distribution is the same amount as Taxable amount, federal tax amount is 10% of Gross amount, line 7 has code 3.

A box 7 code 3 is for a *pension* distribution for an employee on a disability pension and has nothing to do with a Roth IRA.

For a code 3, TurboTax will ask if you are over or under the minimum retirement age that you could have retired at if still working. If under that age then the box 2a (or box 1 if 2a is blank) amount is treated a wages and put on line 1 of the 1040 since a disability pension is a wage replacement. Is over retirement age then it goes on line 4 as a pension.

If you do not know the minimum retirement age then contact the plan administrator.

Re: 1099 R

Cmkayser21 — Mon, 10 Feb 2020 21:29:26 GMT

It is my understanding if you are totally disabled the 10% penalty does not apply. Since this is the case what is the correct code in Line 7 that should have been used so TurboTax does not apply the Penalty?

Re: 1099 R

macuser_22 — Mon, 10 Feb 2020 21:49:42 GMT

@Cmkayser21 wrote:

It is my understanding if you are totally disabled the 10% penalty does not apply. Since this is the case what is the correct code in Line 7 that should have been used so TurboTax does not apply the Penalty?

You might have entered something incorrectly. I suggest deleting the 1099-R totally and re-enter. (If there is a 5329 form, delete that also)

A box 7 code 3 does not apply any early distribution penalty. A pension is never subject to a penalty.