topic Re: Incorrect Code on 1099-R in Get your taxes done using TurboTax

Incorrect Code on 1099-R

Beach4 — Mon, 09 Mar 2026 07:29:15 GMT

I received notice of a settlement of an ERISA lawsuit from a 401k plan I used to participate in. I decided to take the distribution in cash since I’m over 59.5. When I received the 1099-R, it was coded as an early distribution. How do I fix this?

Re: Incorrect Code on 1099-R

JohnW152 — Mon, 21 Mar 2022 12:16:35 GMT

If you think the code is erroneous, you should contact the payer to have a corrected Form 1099-R issued.

Don't change the distribution code on your 1099-R when you're entering it into TurboTax. If the code that you enter for the 1099-R doesn’t match what the IRS has on record for the same 1099-R, this will raise a red flag with the IRS.

Re: Incorrect Code on 1099-R

dmertz — Mon, 21 Mar 2022 12:19:10 GMT

You can claim an Other reason exception to the early-distribution penalty. Go to Other Tax Situations -> Additional Tax Payments -> Extra tax on early retirement withdrawals and enter the amount in the Other box.

Re: Incorrect Code on 1099-R

Beach4 — Mon, 21 Mar 2022 14:00:15 GMT

Thank you!

Re: Incorrect Code on 1099-R

Evesings — Thu, 31 Mar 2022 18:28:58 GMT

Interesting and I wonder if it’s the same ERISA settlement I received. Mine is coded “4.00” which of it refers to “4” means death. Wrong of

course.

Reaching anyone to correct the 1099-R is impossible. I’m beginning to wish I had opted out!

Re: Incorrect Code on 1099-R

DianeW777 — Thu, 31 Mar 2022 18:47:17 GMT

If you are at least 59 1/2, you should follow the steps provided by @dmertz to use an exception to the penalty if necessary. Your code 4 however would eliminate the 10% penalty or a code 2 would also eliminate any early distribution penalty without any extra steps.

@Evesings

Re: Incorrect Code on 1099-R

Evesings — Thu, 31 Mar 2022 18:54:01 GMT

Thank you for your quick response!

My taxes are typically very simple and I have been doing them on my own for 30+ years pretty

much using TurboTax for as long as it’s been available. So the suggestion of “consulting my tax advisor” is pretty unhelpful and that’s what I’m sure I will be told if I could actually reach anybody who handled the 1099R distributions in this case

Seems then that I will need to use the code 4 (4.00 is how it actually reads) as provided.

Thank You again!

Re: Incorrect Code on 1099-R

dmertz — Thu, 31 Mar 2022 19:06:21 GMT

Code 4 suggests that you received the distribution as beneficiary of a deceased participant. With regard to any early-distribution penalty, code 4 is treated the same as code 2 or code 7, meaning that it is not subject to this penalty. The only difference is that code 4 just means that a non-spouse beneficiary is not permitted to roll over this distribution.